Customer satisfaction wavers with inflated vehicle prices

April 28, 2022 | 10:00
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Inadequate inventories as a result of the ongoing global semiconductor shortage are leading to car dealers in Vietnam attempting to force thousands of US dollars worth of extras onto potential customers, much to their chagrin.
Customer satisfaction wavers with inflated vehicle prices
Many car manufacturers are facing a supply deficit, meaning customers can feel the brunt of added costs, Le Toan

Car buyers in the country have expressed disappointment as dealers are inflating prices of new cars by as much as $4,000 or more depending on the model, and even refusing to sell the vehicle if no extras are wanted.

Hot models such as Hyundai’s SantaFe and Tucson, Ford’s Ranger and Explorer, and newly-launched Toyota vehicles such as the Raize and Veloz Cross have seen an average mark-up of thousands of US dollars higher than the listed prices.

One Toyota dealership in Ho Chi Minh City is offering the Veloz Cross along with some accessories at $1,700-2,600 higher than normal, and much higher than the imported equivalent from Thailand and the original fixed price.

Elsewhere, a Hyundai dealership is offering the Tucson model in standard version for $1,740-3,000 higher than the listed price, while its 1.6l Turbo model and other special versions are being sold for as much as $6,500 more than normal.

Some Hyundai dealers have asked customers to pay an additional $3,000-$5,600 to receive its Santa Fe model or $2,220-4,300 to get its Tucson model immediately without any add-ons.

Duong Van Phong, a customer in Hanoi’s Cau Giay district, said that he was looking for a Hyundai model and was told one would be available in the next 5-6 months.

“As customers are concerned about the long wait, the salesperson will say that they are available sooner – however, if we want to have a car immediately, we are forced to pay for the car and its add-ons with an extra $3,000,” said Phong.

Add-on products are often being marketed at rates well beyond dealer expenses since they include additional services such as tyre and dent protection plans, car insurance, and much more, with wildly inconsistent prices among dealers.

Meanwhile, Nguyen Vien Thong in Ho Chi Minh City’s District 7 was in the mood to buy a Toyota Veloz Cross. “I ordered a car, which they said would be delivered in the next two months, but the dealership returned the deposit because there was no car,” Thong said. “However, when my friend asked the dealership about the same model, he was offered it within days as long as he paid an additional $4,350.”

Markups on cars are even more dramatic these days as the registration fee for domestically produced vehicles of 50 per cent is set to end in late May.

Online criticism of the trend of selling cars more quickly if add-ons are accepted was directed towards dealers and the carmakers themselves. “These days, there are too many brands for us to buy. If carmakers or dealers are forcing us to buy unreasonable add-ons when purchasing a car, they can expect to lose brand loyalty,” said Tuan Bui, a member of a popular car forum.

When automakers sell their vehicles to dealerships to sell, they normally propose a retail price, but dealers are not required to follow it.

A representative of Toyota Vietnam said that the company places customers first. “Toyota Vietnam has asked all dealerships to ensure customers’ rights,” said the representative. “We will receive feedback from customers via a hotline and provide essential penalties for dealerships if they detect any violations.”

Customer satisfaction wavers with inflated vehicle prices

However, so far, the company has not announced any information about offending agents or specific handling methods, although it is said to have previously received some feedback from customers about the matter.

This is not the first time the Japanese automobile manufacturer has complained about the same case. Previously, in 2020 and early 2021, dealerships were found to have raised the selling price for its models of Toyota Corolla Cross due to shortages. Numerous add-ons were forced in as part of the car purchase if customers wanted to receive quicker access to the vehicle in question. However, there was no dealership to be fined.

A representative of Ford Vietnam explained that the pandemic has been significantly affecting the supply chains of automobile manufacturing, causing a huge crisis with the shortage of semiconductors and materials such as iron and steel, as well as risks to cash flows. “Most carmakers have faced a supply deficit, along with numerous other challenges. So if they don’t need a new car urgently, customers should wait until the end of the year,” said the Ford representative.

According to the Vietnam Competition and Consumer Authority under the Ministry of Industry and Trade, carmakers do not participate in dealers pricing at present. The current law still does not have a mechanism to handle and control the issue of inflating prices.

A few weeks ago, two US-based Nissan dealerships had to pay over $400,000 in restitution to consumers as part of a settlement for allegedly advertising low vehicle prices online but refusing to sell the vehicles at that price in the dealership.

According to the Vietnam Automobile Manufacturers Association (VAMA), in March the total industry is at 36,962 units sold, up 60 per cent on-month and 17 per cent on-year, of which 28,491 units were passenger cars; 7,794 units were commercial vehicles, and 677 units were SPVs.

According to VAMA’s report published in April, this was the first month of this year where auto sales of VAMA members had strong growth, after decreasing by 34 per cent in January and 26 per cent in February. For the first quarter, VAMA members sold 90,506 units, up 27 per cent year on-year.

Besides car sales of VAMA member units, the Vietnamese auto market also currently contains the presence of many other car manufacturers, such as Audi, Jaguar Land Rover, Mercedes-Benz, Nissan, Subaru, Volkswagen, and Volvo, but these companies have not yet disclosed business results for the period.

By Hara Thu

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