Car sales increasing, contractionary policy not applied to rich people | Look At Vietnam - Vietnam news daily update

LookAtVietnam - Contrary to all predictions that cars would sell more slowly due to higher sale prices caused by the dong devaluation, and the high inflation rate, cars still have been selling very well.

Bad news thought to badly affect car market…
In general, February is a time when automobile dealers launch sale promotion campaigns to boost sales in the low season which comes after the Tet holiday. However, the economic law cannot be applied this year. Car dealers have even raised sale prices, and justified their actions with the dollar price increases.
In mid February 2011, right after the State Bank of Vietnam announced the 9.3 percent dong devaluation, Toyota Vietnam pioneered the sale price increase movement by raising the sale prices by 34-174 million dong per car. The new prices became effective on March 1.
Following the move, other automobile manufacturers, including GM Daewoo (Vidamco), Truong Hai (Kia), Ford Vietnam and Honda Vietnam also announced the increases of sale prices of their products. The price increases are relatively sharp from tens of millions dong to hundreds of millions dong.
The sharp price increases are believed to make people who dream of owning cars rethink their purchase plan.
While the news about the dollar appreciation was still shocking car dealers and people, they received another shocking news: the petrol price has been raised by 2900 dong per liter. This means that car owners will have to pay 300,000 dong more for every 100 liters of petrol used. The petrol price increase has been described as pushing the dream of purchasing cars farther away from many people, because it will be more costly to “feed” the cars.
Meanwhile, people have been warned that the petrol price may increase further in the future, because the latest 2900 dong per liter increase proves to be nothing if compared with the price increases in the world market, and that petroleum distributors need to raise the prices further to cover their expenses.
Another difficulty believed to be keeping people away from purchasing cars is that banks are tightening credit and they do not intend to increase consumer credit or fund car purchases. Commercial banks have been told not to expand loans to non-production sectors. Even when banks’ doors are open to people, they will not be able to access loans, because the lending interest rates have become overly high, reaching 22-23 percent per annum.
…but cars still selling well
Believing that the demand for cars would drop sharply as a result of the bad news, car dealers decided to reduce the numbers of imports in February. The General Statistics Office GSO released a report showing that the import revenue of cars under the mode of complete built units (CBU) in February 2011 dropped sharply in comparison with the previous month and with the same period of last year.
In February 2011, only 4500 cars were imported which had the total import turnover of 76 million dollar. The figures represent a sharp reduction of 1600 cars in comparison with January and a sharp reduction of 27 million in import turnover. Meanwhile, if compared to the same period of 2010, the number of imported cars and import turnover decreased by 17.8 percent and 20.5 percent, respectively.
As such, in the first two months of the year, the number of imported cars only reached 10,600, while the import turnover only reached 179 million dollar. Analysts believe that the imports will decrease further in the next few months.
However, contrary to all predictions, the demand for cars remains very high despite sale price increases.
The Vietnam Automobile Manufacturers’ Association VAMA on March 9 released a report showing that the association’s members sold 7889 cars in February, an increase of 56 percent in comparison with the same period of 2010.
According to VAMA, the sales showed a 24 percent decrease in comparison with January 2011. However, experts said that it is unreasonable to compare the sales in February with the sales in January. In principle, the demand in the month before Tet month (January) is always higher than the month after Tet (February).
The sales increases can be seen in all the three main types of products. Especially, the sharpest increase was seen in the sale of sedans, at 63 percent, while trucks and buses have increased 54 percent and SUVs 49 percent.
Toyota and Truong Hai are still leading in the numbers of cars sold. Toyota sold 2223 cars, just 300 cars higher than Truong Hai’s.
The third position in car sales belonged to Vinamotor (887), followed by Vidamco (666), Ford and VInaxuki (550) and Honda (371).
C. V