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Car prices expected to drop further   2008-12-29 - NLD

Analysts have predicted further car price decreases in the time to come, as most automobile manufacturers and importers are still reporting big overstocks and the purchasing power still remains very low.


The quiet market


Le Nguyen Ha, Director of a HCM City-based company specializing in importing cars from the US, said that he has not gotten any orders in the last two months, while many of the cars he imported earlier this year have still not been sold.


Ha said that the market is now very gloomy, this is quite different from previous years. The month just before 2008 Tet saw sales increase by 300%. There were so many orders that importers had to bring cars to Vietnam by air in order to get cars delivered promptly to clients.


According to Nguoi lao dong newspaper, the number of cars arriving at ports these days has decreased by nearly 95%. Vict port, for example, had 2,000 customs declarations for car imports in the first six months of the year (some declarations were made for large car imports), while it had only 164 declarations in the last six months, with 363 cars imported.


Locally-made cars have also seen sales going very slowly, despite big promotion programs with attractive discounts offered, ownership registration tax and insurance premium prop-ups, gifts and lucky draws. Dinh Van Thien, a salesman of Hoa Binh Automobile Sales Agent, on Cong Hoa Street in Tan Binh district, HCM City, said that only several cars can be sold in one month, which does not bring the turnover high enough to pay for the business premise leasing fee.


Analysts said that the price reductions have never been as sharp as now. Hyundai, for example, is carrying out a promotion program for the Getz model, which will last until the end of February 2009, offering sharp price reductions of $6,600-7,000/car, or 30%.


Car prices to decrease further


Slow sales are also occurring in the world market. Having big overstocks and sales decreasing by 60%, several automobile manufacturers have had to halt production. Toyota reportedly saw sales down by 21.8% in November, while Chrysler was down by 50%. Most automobile manufacturers have seen turnovers go to the deepest low in decades, while BMW has said that now is the most serious crisis in the history of the automobile industry.


Even in China, a big market, sales agents also have had to lower sales prices to sell cars at a loss, but the consumption remains very low.


Analysts said that approximately 80% of sales agents incurred losses in 2008, which they believe will force the agents to bargain cars away in upcoming months. This will bring opportunities to Vietnamese car importers to import cars at low prices. Therefore, analysts have every reason to believe that the car prices will further decrease in 2009.


There is also good news for car buyers that Vietnam has signed an economic partnership agreement with Japan, under which Vietnam will lower import taxes on the industrial imports from Japan.


Toyota Vietnam said that car parts for assembling have been imported primarily from Thailand and Indonesia, which are being imposed 5-10%, while the car parts from Japan 15-25%. If the tax rates are lowered, the car prices will decrease accordingly.

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