Automotive industry in Vietnam - statistics & facts
Purchasing a car has always been considered a substantial investment in Vietnam. However, with increasing purchasing power stemming from economic improvement, more Vietnamese are able to afford such vehicles. Vietnam’s automotive market is now among the fastest-growing in Southeast Asia. While still seen as a big-ticket item, cars are increasingly crowding the streets of Vietnamese cities, emerging as one of the main modes of transportation alongside motorcycles for many urban residents.
What cars are Vietnamese driving?
Although Vietnam has a notoriously high import tax for automotive vehicles, imported cars are widely popular due to the limited capacity and capability of the domestic sector. Indeed, the production of assembled automobiles by local manufacturers depends heavily on the imports of advanced parts. Hence, locally-produced cars often do not have competitive pricing compared to their foreign counterparts. Additionally, the volume of automobiles produced in Vietnam has been fluctuating in the past decade and remains modest, accounting for roughly ten percent of the market share.
Correspondingly, Vietnam’s automobile market has been dominated by foreign brands, especially by Japanese and Korean manufacturers, due to their affordable price tags and low maintenance costs. The most popular car makers of choice among Vietnamese consumers were Nissan and Toyota, holding over 20 percent of the market share each in 2021. With that said, it is not rare to spot a German automobile on the streets of Vietnam. Often seen as a symbol of luxury and prestige, European car brands have also won over a niche segment of affluent Vietnamese consumers.
Automotive market bottoming out amid the COVID-19 pandemic
During the COVID-19 pandemic, many Vietnamese families experienced a decrease in income, as well as a reduced need for travel due to the various lockdowns. As a result, the sales volume of automobiles declined significantly in 2020 after years of continuous growth. The beginning of 2021 saw an improvement in the pandemic situation in Vietnam, leading to a higher intention to purchase big-ticket items, including cars, among Vietnamese people. In September 2021, the automobile segment in the country recorded the first growth in the sales volume of these vehicles after months of consecutive decreases. However, it might take years for the automobile industry in Vietnam to bounce back to pre-pandemic levels and more consistent and sustainable growth of consumption.
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