Mercedes Benz's first authorised dealer in Vietnam reports first-time loss since 2012

Haxaco's bid for competitive sales programmes resulted in heavy losses

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Haxaco (sticker HAX on HoSE) released its financial statement in the second quarter of 2017 with a loss of over VND7 billion ($307,930). This was its first loss since 2012. Haxaco’s accumulated profit in the first half of 2017 was about VND19 billion ($835,810), a decrease of 43 per cent compared to the same period last year, as reported by Vnexpress.

As one of three authorised dealers of Mercedes-Benz in Vietnam, Haxaco’s business results are a big surprise as Mercedes-Benz's sales in Vietnam significantly increased in the first half.

According to the statistics of the Vietnam Automobile Manufacturers' Association (VAMA), 3,375 units of Mercedes-Benz were sold in Vietnam in the first six months of 2017, an increase of 37 per cent compared to the corresponding period last year.

Leaders of Haxaco said that this loss was due to the growth of sales and administration expenses, as Haxaco offered a variety of promotion programmes to compete other dealers. Besides, Haxaco had to sell some C-class automobiles at a lower price because these automobiles have been in the warehouses for a very long time. This also negatively influenced Haxaco’s business results during this period.

With the high sales of Mercedes-Benz in the second quarter of 2017, Haxaco generated nearly VND1.04 trillion ($45.7 million) of net revenue, a growth of 21 per cent compared to the same period last year.

In the first half of 2017, Haxaco reported more than VND1.8 trillion ($79.2 million) of revenue, an increase of 40 per cent in comparison with the corresponding period last year. While other automobile dealers simultaneously conducted discount policies in Vietnam, Haxaco had to offer a wide range of promotions to support customers.

Therefore, both sales and administration expenses doubled compared to the same period last year. These expenses were nearly VND62 billion ($2.7 million) in the first six months of 2017, against the VND30 billion ($1.3 million) last year.

Besides, the number of imported automobiles left unsold in Haxaco’s warehouses sharply increased, leading to growing expenses (mostly in interest expenses). In the first six months of 2017, Haxaco took up over VND400 billion ($17.6 million) in short-term loans from commercial banks, thus, its interest expenses have been more than VND14 billion ($615,869), 3.5 times as much as in the corresponding period last year.

According to the financial statement of Haxaco, this short-term borrowing derives from the growth of Mercedes-Benz car storage due to the increasing demand. As of the second quarter of 2017, Haxaco’s inventory increased to VND610 billion ($26.8 million), while it was VND390 billion ($17.1 million) at the beginning of the year.

The rising storage of Mercedes-Benz urged Haxaco to sell off the old inventory, leading to the sales of C-class cars at a lower price than usual.