A car assembly line of TC Group. The Hyundai cars distributor in the Vietnamese market witnessed a fall of 38 per cent in sales in the first half of 2023. Photo courtesy of the company

HÀ NỘI — Automobile companies continued to witness disappointing business results in the second quarter due to declining sales as consumers tightened spending. However, the industry may see improvements in the rest of the year, said experts. 

A report by the Việt Nam Automobile Manufacturers Association (VAMA), in the first six months of 2023, VAMA’s members sold a total of 137,327 vehicles, down 32 per cent year-on-year. Of which, sales of cars decreased by 37 per cent, commercial vehicles dropped 11 per cent, and specialised vehicles were down 65 per cent. 

During the same period, the domestic electric car producer VinFast had delivered 11,638 cars, a nearly 20 per cent decline year-on-year, according to its financial statement. 

Meanwhile, TC GROUP, a distributor of Hyundai cars in Việt Nam, sold 28,011 cars in the first half of the year, down 38 per cent over last year. 

Compiling official data from VAMA, TC Group and VinFast, 32,063 vehicles were sold in June, bringing the total sales in the first six months of the year to 176,976 vehicles of all kinds, a decrease of 30 per cent on-year. 

As a result, automobile enterprises listed on the stock exchanges reported a sharp decline in profits in the first half of 2023.

Particularly, Haxaco, a Mercedes-Benz distributor in Việt Nam, posted a net revenue of VNĐ797.2 billion, down 48.5 per cent over last year. Deducting expenses, the company only made a profit after tax of VNĐ2.7 billion,  a 96.6 per cent decrease on-year. This is also the lowest profit recorded since the third quarter of 2021.

Savico, the car distributor with the largest market share in Việt Nam, recorded a net profit of only VNĐ1.1 billion in the last quarter, down 96.7 per cent year-on-year. 

City Auto Corporation, a distributor of Ford cars, also reported a decrease of 87.3 per cent in consolidated profit after tax.

TMT Motors and Giải Phóng Automobile even also posted losses in the last quarter. Giải Phóng Automobile had lost for a straight ten years, while TMT Motors surprised the market with a loss of nearly VNĐ720.3 million. TMT Motors has just launched a mini electric car - the Wuling HongGuang MiniEV.

In the first quarter, the group's revenue and net profit decreased by 14.8 per cent and 11 per cent over last year, respectively, according to VNDirect Securities Corporation.

Chances of reversing course

After struggling in the first half of the year, the industry will likely change positively in the near future, the securities firm added. 

It expects lower interest rates will boost the demand for luxury goods as the State Bank of Việt Nam (SBV) has cut operating rates since the end of May.

In addition, Decree No. 36 on extending the time limit for paying excise tax on domestically manufactured or assembled cars will take effect from June 21 to the end of this year.

This is the fourth time the special consumption tax on domestically manufactured and assembled cars has been extended to support and restore production and business due to the impact of the COVID-19 pandemic.

Also supporting the industry, the Government has approved a draft to reduce registration fees by 50 per cent for domestically produced cars, effective from July 1 to the end of 2023.

Historical data showed that, after applying the fee reduction in the second half of 2020 and the first six months of 2022, total auto sales in the whole market witnessed a strong recovery.

Particularly, sales of cars in the second half of 2020 reached 189,451 units, up 76 per cent over the first half of 2020 and 33 per cent over the previous year, while that of first six months of 2022 rose 36 per cent year-on-year to 252,932 cars.

Therefore, VNDirect expects preferential policies from the Government will be the main driving force for the recovery of the auto industry for the rest of the year. 

Moreover, as electric vehicles (EVs) are gradually becoming a trend, the International Energy Vehicles Agency (IEA) sees large EV manufacturers like VinFast or TMT Motors stepping in to take advantage of it. 

VinFast currently has a series of popular EV cars from A to E-segments, including VFe34, VF3, VF5, VF6, VF7, VF8 and VF9.

In the first quarter, global electric vehicle sales increased 32 per cent year-on-year, according to the latest research from Counterpoint. — VNS