The Vietnamese automotive market experienced a significant slowdown in December 2024, as sales plunged 25% year-over-year to 27,403 units, according to the Vietnam Automotive Manufacturers Association (VAMA). This decline follows the expiration of a 50% vehicle registration tax discount implemented by the government to boost sales. It’s important to note that VAMA’s data excludes sales figures from key players like Mercedes-Benz, Hyundai, Tesla, Nissan, domestic manufacturer VinFast, and several emerging Chinese brands.
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Strong Growth Earlier in 2024 Driven by Tax Incentives
The December slump contrasts sharply with the robust growth witnessed in the preceding months, fueled by the temporary tax break. Despite the overall economic prosperity in Vietnam and vigorous promotional efforts by dealerships, the vehicle market remains sluggish. The Vietnamese government reported a 7.5% year-on-year GDP growth in Q4 2024, accelerating from 7.4% in Q3, driven by strong domestic consumption, investment, and exports. This economic strength hasn’t fully translated into automotive sales momentum.
Full-Year Sales Show Modest Gains Despite December Dip
Despite the December setback, VAMA members reported a 7% overall increase in vehicle sales for the full year 2024, reaching 295,979 units compared to 276,377 units in 2023. Passenger vehicle sales saw a modest 3% rise to 220,295 units, while commercial vehicle sales rebounded significantly with a 23% increase to 75,684 units. Including non-VAMA members, total vehicle sales in Vietnam are estimated to have surpassed 500,000 units in 2024.
Key Players and Market Trends in Vietnam’s Auto Sector
Truong Hai (Thaco) Group, a major player in the commercial vehicle segment and distributor for various international brands, experienced a 7% decline in group sales to 90,989 units in 2024. This included a 15% drop for Kia to 34,570 units and a 9% decrease for Mazda to 32,601 units. However, Thaco’s commercial vehicle sales saw a 13% increase to 18,251 units. Toyota enjoyed a 16% sales surge to 66,576 units, bolstered by the relaunched Hilux pickup truck. Ford also saw a 10% rise to 42,175 units, driven by strong demand for its Transit and Ranger commercial vehicles.
Mitsubishi’s sales jumped 33% to 41,198 units, thanks to the successful launch of the XForce SUV. Honda achieved 28,267 sales, a 19% increase, while Suzuki experienced a 23% decline with 20,262 units sold. Notably, VinFast reported impressive sales figures, exceeding 87,000 units in 2024, more than double its 2023 volume and surpassing its 80,000-unit target. The VF5, a small battery electric vehicle (BEV), led VinFast’s sales with 32,000 deliveries, followed by the VF3 with 25,000 units. Hyundai distributor Tan Chong International reported selling 67,168 vehicles in 2024, a slight decrease from the previous year.
Future Outlook for Vietnam’s Automotive Market
The December slowdown indicates potential challenges for Vietnam’s auto market in the near term. However, the overall full-year growth, driven by strong economic fundamentals and the increasing presence of electric vehicles, suggests a dynamic and evolving landscape. The performance of key players like VinFast and the evolving preferences of Vietnamese consumers will continue to shape the future of this market.
