Vietnam automobile distributors still face hurdles
The Vietnamese auto market is forecast to remain weak in the first half of this year before picking up in the second half.
According to the Vietnam Automobile Manufacturers Association (VAMA), auto sales improved in the fourth quarter (Q4) of 2023, especially December, as demand often rises at the year-end.

A Mercedes model. Photo courtesy of Mercedes Vietnam.
Specifically, sales in December reached 38,740 units, up 39% compared to November and 10% over the same period in 2022. The month recorded the highest sales of the year. In Q4, the whole market saw more than 92,000 cars sold, much higher than an average 70,000 in previous quarters but still down 15% year-on-year.
In that context, auto distributors still recorded weaker Q4/2023 revenue compared to the same period in 2022, but still the highest level of the year. However, weak purchasing power forced companies to offer more attractive promotions, resulting in thin gross profit margins.
Savico, listed on the Ho Chi Minh Stock Exchange (HoSE) as SVC, the leading car distributor with a market share of 8.4% nationwide (2022 data), announced Q4 net revenue of VND6,572 billion ($269.34 million), surpassing the the first quarters of the year but down 6.5% year-on-year. However, its after-tax profit reached only VND11.5 billion ($471,300), plunging 86%.
The firm said that the car market in Q4/2023 still faced many difficulties, so its subsidiaries had to increase sales expenses to maintain market share. This caused gross profit and net profit from business activities to decrease and sales costs to increase.
For the whole 2023, Savico’s revenue fell 2% year-on-year to VND20,849 billion ($854.5 million) but net profit plummeted 93% to VND23 billion ($942,600). Its gross profit margin went down but interest and sales expenses surged.
Similarly, City Auto Joint Stock Company (HoSE: CTF), specializing in distributing Ford cars, reported that its revenue in Q4/2023 hit VND2,194 billion($89.9 million), the highest level in the year but a slight decrease compared to the same period in 2022.
Although financial revenue soared from VND15.6 billion to VND50 billion ($2.05 million), gross profit margin dropped while interest and sales expenses rose. Therefore, the company reported a profit of nearly VND6 billion ($245,850), down 83% year-on-year.
Its 2023 revenue increased 12.6% year-on-year to VND7,100 billion ($290.9 million) and net profit was VND43 billion ($1.76 million), down 61.5% compared to 2022. The company said the reason for the sharp decrease in net profit was falling demand due to the global recession.
Haxaco (HoSE: HAX) also recorded a sharp decrease in revenue and profit after a thriving 2022. Its revenue decreased 41% to VND3,982 billion ($163.2 million) while after-tax profit plummeted 84% to only VND48 billion ($1.97 million).
In Q4 alone, the firm’s revenue dropped 33% to VND1,077 billion ($44.13 million) and after-tax profit declined 52% to VND28 billion ($1.15 million), much lower compared to the first quarters of the year.
Saigon Securities (SSI) predicted that the auto market will still face difficulties in the first half of 2024 due to weak consumer demand and buyers' mentality of waiting for new car models. For the whole year, the market will show a recovery in both quantity and value thanks to the economic recovery in the second half of the year, new car models, the shortage of chips for cars being fixed, and attractive interest rates compared to 2023.
The SSI report also pointed out that fierce competition for market share continued. Leading businesses such as Toyota and Honda recorded a decrease in market share in 2023, while smaller companies like Ford, Kia, Mazda, and Mitsubishi saw their market shares increase thanks to better pricing strategies.
Chinese manufacturers brought more brands into Vietnam (Lynk&Co, Haima, MG) and opened assembly factories in 2023 (Wuling, Chery), it said, adding electric vehicles have become more popular in Vietnam, accounting for 6% of passenger car sales in 2023, thanks to Vinfast's efforts.
Distributors have expanded their vehicle portfolios in the new context. Specializing in distributing high-end Mercedes-Benz cars, Haxaco through its subsidiaries now sells popular cars such as MG and electric cars manufactured by Mercedes-Benz and Vinfast.
Besides Ford and Hyundai, City Auto also plans to distribute electric vehicles. The company said it has learned about electric vehicles by sending survey teams to fairs and exhibitions. It will soon begin installing battery charging stations.
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