Speed bumps for auto-makers

illustration photo

According to the Vietnam Automobile Manufacturers Association (VAMA) sales report last week, just 6,982 cars were sold in April, a 24 per cent drop against March and 46 per cent less than the same period of 2011.

“April’s poor sales figures saw a market sales forecast for 2012 falling to 81,000 car units [down from a targeted 130,000-140,000 car units], tantamount to sales in 2007,” according to VAMA.

Of the 6,982 sold car units, there were just 2,394 cars and 4,588 trucks, sinking 26 and 22 per cent respectively against March. Sales of locally-assembled cars came to 5,504 units, down 24 per cent and imported cars fell to 1,478 units, sagging 23 per cent against March.

Generally, auto sales figures in the first four months of 2012 tumbled 42 per cent against the same period in 2011, with cars dropping 49 per cent and trucks sliding 36 per cent.

“This unpleasing practice forced manufacturers and assemblers to exercise measures to cut production. However, cutting-back personnel is now necessary,” said an auto firm director.

Auto sales agents also face unsold stock.

VAMA attributed plummeting sales to multiple fee impositions on vehicle owners. Accordingly, from September 2011 car ownership fees hiked to 20 per cent in Hanoi and 15 per cent in Ho Chi Minh City from 12-10 per cent previously and government proposed imposition of road maintenance fee and fee on limiting personal vehicle usage on vehicle owners have allegedly frozen car market sales.

VAMA argued the falls would continue unless the government manifested a clear approach towards fees.

Recent surveys by online newspapers showed that 52 per cent of respondents said they would not buy cars due to the proposed fee imposition, while 23 per cent said they would think carefully before making a purchase.

Besides, current high lending rates of 18-20 per cent for car purchases parallel to strict requirements have also hurt sales.

Flat auto sales have also put a dent in state budget revenue. Compared to the same period in 2011, sales in the first four months of 2012 were down 21,331 units. Assuming each car cost VND500 million ($23,800) and the market current sharp fall continued the state coffers would incur losses mounting to VND60,000 billion ($290 million) due a lack of collected taxes from the auto sector this year.