Hanoi (VNS/VNA)  — The recent decline in Vietnam’s automobileconsumption and its drop to the fifth place in Southeast Asia can beattributed to both external and internal factors, car experts said.

According to the Association ofSoutheast Asian Automobile Manufacturers (AAF), in the firstsix months this year, Indonesia took the lead in car sales with 505,000units, an increase of 6.3% over the same period last year. Thailand wasin second place with 406,000 units, a slight decrease of 5%while Malaysia came in third with 366,000 units, an increase of 10.3%.Notably, the Philippines rose from fifth position to fourth with 202,415 carssold, a sharp increase of 30.7%. Meanwhile, Việt Nam dropped to fifth placewith 137,327 units, a sharp decrease of 32% compared to the same period lastyear.

According to industry insiders,external factors such as the Russia-Ukraine conflict and global inflation havehad an impact on Vietnam’s automobile consumption, along with other adversedevelopments. These factors affected consumer confidence and purchasingpower, leading to a decrease in car sales.

Domestic auto sales in August plunged nearly 27% year-on-year to 22,540 unitsas consumers continued to tighten their spending amid economic difficulties.Sales in August were lower than in June and July.

Internally, Vietnam faces challenges in its economy and market conditions thathave contributed to the decline in automobile consumption. Compared to someSoutheast Asian countries, Vietnam’s economy is still developing, and theliving standards and purchasing power of its people may not be as high.

Pham Cuong, Chairman ofthe Vietnam Auto Motorcycle and Bicycle Association (Vamoba),said Vietnam’s car prices are relatively high compared to other countriesin the region, with a price policy that is considered unstable. This pricedisparity, along with limited choices in car models, can affect consumerpreferences and their ability to purchase cars.

Dao Cong Quyet of the Vietnam Automobile ManufacturersAssociation (VAMA), has pointed out that Vietnam was affected by theCOVID-19 pandemic later than other Southeast Asian countries, which resulted ina delay in its recovery. As a result, it may take more time for Vietnam to showsigns of improvement in general consumption of goods, includingautomobiles.

Other factors contributing to the decline in car consumption in Vietnam includehigh bank interest rates and liquidity issues in the real estate market.These factors can affect consumer financial capabilities and theirwillingness to invest in high-value goods like cars, Quyet added.

Car expert Nguyen Minh Dong said car prices in Southeast Asia countries are30-40% cheaper than in Vietnam. While, Vietnam’s price policy is not stable.Car markets in these countries also have more car models, therefore, consumershave more choices. Đồng said it is necessary to exempt and reduce specialconsumption taxes and some types of fees and charges for cars so as to createincentives for more people to buy cars.

Tran Thanh Tung, head of the Business Administration at Ho Chí Minh CityUniversity of Economics and Finance, said it is worth noting that thedecline in car sales in Vietnam is not necessarily viewed as a bad signal. Someexperts see it as a reflection of cautious spending in the context of slowingeconomic growth and high loan costs. In addition, it can help alleviatepressure on the country's road infrastructure, which is already burdened by ahigh number of personal vehicles.

To address the decline in automobile consumption, experts have suggestedmeasures such as exempting or reducing special consumption taxes and fees forcars, providing more car model options, and studying car loan policies fromother countries in the region. These measures aim to create better conditionsfor consumers and stimulate the market./.