An increase in second-hand car imports, rocketing petrol prices and the impending end of sale contracts among local automobile makers are expected to cool a hot auto market.
The auto market is set to hit a few speed bumps
“The automobile market will continue growing, but prospects are not bright as expected. The growth rate is expected to vary from 10 to 20 per cent next year,” said Huynh Du An, general director of Euro Auto, the distributor of complete-set BMWs in Vietnam.
This year, a high economic growth rate and robust stock and property markets have contributed to boosting demand for automobiles. Local assemblers and manufacturers have been unable to meet demand, creating opportunities for second-hand imported cars, particularly since tariffs were lowered. Car assembling and manufacturing firms in Vietnam have also expressed concern that if they do well this year, their mother companies will impose higher growth rates for the following years.
According to industry insiders, under rising demand pressures, assemblers and manufacturers have begun increasing orders for components. Considering it takes six months from the time the component is imported until a completed car is churned out, the number of component sets will be high until the first three months of 2008. This means the supply of locally-made cars will increase, giving imported vehicles a run for their money.
Meanwhile, severe traffic congestion in Vietnam’s largest cities has forced consumers re-think buying a new car.
On the other hand, a litre of petrol on the domestic market recently increased to VND13,000 (81 cents) on the back of rises in price of crude oil on the international market. The cost of petrol is expected to rise further as Vietnam floats prices in line with international standards.