The race of cutting car price among auto makers has been breaking out for months and till now is considered the climax when almost all car manufacturers are crazily offering discounts and lowering the price.
Massive discount
The race of reducing car price was kicked off by Truong Hai Auto with the Mazda CX5 model, which was cut from more than VND1 billion (roughly US$44,000) per unit to only about VND840 million (~US$37.000) per unit in the moment.
Chevrolet and Nissan immediately responded with a discount program that will last through September.
All lines of Chevrolet imported and manufactured by General Motors Vietnam have been discounted since early September, ranging from VND9 million (US$396) to VND80 million (US$3,520), depending on the model.
Nissan is offering both cash discount and gifts for certain products. All six versions of Navara branded cars see the largest discount, up to VND45 million (US$1,980). Teana and Juke are supported 2% of registration fee, from VND20-30 million (US$880-1319.99).
Toyota enters the race by applying preferential policies to customers when purchasing luxury cars such as Vios or Innova.
Honda's dealers themselves reduce the price of a CR-V branded car by US$13,200 down to less than VND800 million (US$35,200), the lowest reduction ever.
CV-V branded cars witnesses a dramatic price reduction of US$13,200 each
Many comment that the trend will last until the end of the year even if businesses and retailers continue to lose.
Many experts have confirmed that the deadline for the zero import tax on cars made from ASEAN, mainly from Thailand and Indonesia, is the main reason of the ongoing reduction of domestic car price.
Recall the 'whirlwind' of Chinese motorcycle
Recent trend seen in the automobile market are reminiscent of the late 1990s and early 2000s' one, when Chinese motorbikes poured into Vietnam. The two most famous and pioneering brands are Loncin and Lifan.
The influx met the demand of Vietnam - a growing market that time - immediately. Vietnam's motorcycle market grew by 300% in 2000. This led to the fall of Japanese shares in the market, from more than 90% to 30%.
Lifan was initially sold at over VND10 million (US$440), when the genuine Honda Dream was sold at about VND26 million (US$1,144). After that, the model continued to be discounted, even to VND5 million (US$220) for a new unit.
Wave Alpha model of Honda used to blow up the market.It is obviously that lower price means lower quality. The next generation was not as good as before, but the Chinese motorcycle model still triggered a "shock" in the motorcycle market in Vietnam at that time, leaving Honda in big trouble. The Japanese car maker had to lower their Dreams to VND15 million (US$660) to attract customers.
We can see something similar now in the car market. Domestic automakers are constantly reducing car prices under the pressure from imported vehicles. The revised special consumption tax on cars with the capacity of less than 2.0 liters is gradually decreasing to 5% in 2018 from 45% in 2016.
From 2018, when the import tax on completely built cars from ASEAN to Vietnam is eliminated, imported cars will massively pour into Vietnam, vigorously competing with domestic cars.
However, there are still opportunities for businesses to produce cars as the price decreases, the demand will increase especially when cars become more popular. At this time, the market is in need of fair competition based on the investor's capacity and appropriate policy and mechanism from the Government.
