The Growth of Automobile Production in Vietnam (2023)
In 2023, Vietnam’s automobile production volume surged to approximately 347.4 thousand units, marking an increase from the previous year. Despite fluctuations over the observed timeline, the Vietnamese automotive industry continues to demonstrate resilience and growth potential. As a Vietnam Automotive Consulting expert, let’s delve into the various dynamics that contributed to this development and what it means for the future of Vietnam’s automotive market.
Market Share Dynamics
Thaco Group emerged as the dominant force in Vietnam’s automotive market in 2023, securing a 34.6 percent share based on sales volume. This is a significant lead over Toyota, which held a 20.8 percent market share. Thaco’s success is attributed to its strategic partnerships and a diverse portfolio that includes models from globally renowned brands such as Kia, Mazda, Peugeot, BMW, and MINI. This diversity has enabled Thaco to cater to various consumer preferences and establish itself as a market leader, overtaking even the Japanese automotive giant, Toyota.
Consumer Behavior and Market Demand
Despite a modest car ownership rate, the Vietnamese populace exhibits a high interest in purchasing cars. Owning a car in Vietnam is regarded as a significant investment, akin to owning a house. The rising middle-class population and improving living standards, particularly in major cities, have spurred an increasing demand for automobiles. This trend is expected to continue, leading to a steady rise in the number of cars per 1,000 people in the coming years. Vietnamese consumers seek cars for safer, more convenient, and comfortable transportation, driven by positive social perceptions associated with car ownership.
VinFast’s Milestone
VinFast Auto made headlines on August 15, 2023, by listing its shares on the Nasdaq Global Select Market, becoming the first Vietnamese enterprise to achieve this feat. This move signifies VinFast’s ambition to penetrate the global financial market, expand export markets, and advance plans to establish a manufacturing facility in the United States. This landmark event underscores the potential of Vietnamese automotive manufacturers to compete on the global stage.
Emerging Trends and New Entrants
The Vietnamese automotive market witnessed significant developments in 2023, including the introduction of low-cost electric vehicles. In June 2023, TMT Motors launched the Wuling HongGuang Mini EV, the first small-sized electric car manufactured in Vietnam. This milestone opened up a new segment in the Vietnamese automotive market, reflecting a shift towards green and affordable transportation options. TMT Motors aims to provide a viable alternative to motorbikes, aligning with government plans to reduce internal combustion engine vehicles in major cities.
Following this, several Chinese brands, such as Haval, Lynk & Co, and Haima, entered the Vietnamese market, primarily importing their products as complete built units (CBUs). Additionally, the Czech brand Skoda partnered with TC Motor to introduce its vehicles in Vietnam, initially importing from Europe with plans to set up an assembly factory in Quang Ninh.
Regulatory and Economic Measures
The Vietnamese government has implemented several measures to stimulate the automotive market. One notable policy is the 50 percent vehicle registration tax cut applied three times since the COVID-19 pandemic. The most recent tax cut, from July 1 to December 31, 2023, contributed to positive sales growth in the latter half of the year. Despite a 12.3 percent decrease in total domestically assembled cars compared to the previous year, domestically made cars accounted for 74.7 percent of the new car output in 2023.
Price Adjustments and Market Response
In response to market conditions, manufacturers and dealers engaged in a competitive race to slash car prices in various segments. Significant price reductions were observed for unsold 2022 models and newly launched models. For instance, the BMW 735i M Sport saw a price drop of VND450 million, while the Volkswagen Touareg Luxury experienced a reduction of VND400 million. These adjustments, combined with attractive offers such as discounts, gifts, and support in vehicle registration, played a crucial role in attracting buyers.
As Vietnam Automotive Consulting experts, we can anticipate that the Vietnamese automotive industry will continue to evolve and expand. With strategic partnerships, government support, and an increasing middle-class population, Vietnam is poised to become a significant player in the global automotive market.
