Luxury Car Sales Speed Up in Vietnam
HANOI – As the country’s economy continues to strengthen and its consumer class continues to grow, luxury car brands are increasingly looking to Vietnam as a potential market for their products.
According to Andreas Klingler, general director of Porsche Vietnam, while the car market in Vietnam is currently comparatively small, there is a lot of potential for growth. He points out that the “Vietnamese market volume for automobiles [is] only 100,000 per year right now, but it [will] eventually hit one-two million units a year and the sales of luxury cars will increase as well.”
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In fact it appears that luxury car sales in Vietnam are unaffected by downturns in the country’s economy. Despite the country’s recent economic struggles, the luxury car market has continued to see healthy growth.
One of the keys to the recent growth in sales has been the reduced car registration fees in Ho Chi Minh City, the economic center of Vietnam. This reduction has caused a significant decrease in the cost of luxury cars.
According to Dr. Duong Dinh Giam, chief of Vietnam’s Industrial Policy and Strategy Institute, Vietnam is expected to go through a period of “automobilization” once annual per capita income rises above US$3,000. Vietnam will soon reach this tipping point – incomes are seeing strong growth year over year. According to the IMF, during 2013, per capita income was US$1,901.
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New Entrants and Market Leaders
Lamborghini will open its first showroom in Hanoi later this month. CT-Wearnes Vietnam Co. Ltd. has been named as the company’s local distributor; their showroom will be located in the Interserco Trade Center. CT-Wearnes has also been granted the right to provide service maintenance for Lamborghini’s cars in Vietnam.
Lamborghini has stated that they will just sell one model to start, the Lamborghini Aventador LP 700-4. However, as time goes on they will add more models for sale, such as the Huracan LP 610-4.
Other luxury car brands, such as Bentley and Rolls-Royce, have also entered the market within the past year. Previous brands that were available for sale include Mercedes, Lexus, Audi and Porsche.
Previously, before the luxury brands established themselves within the country, customers had to buy the cars through local importers and were often forced to pay very high maintenance service fees due to there being no licensed service providers for many of these types of automobiles.
Luxury cars are becoming increasingly popular in Vietnam. Evidence of this was seen at the 2013 Vietnam Motor Show, held last October in Ho Chi Minh City, which attracted 155,300 visitors and sold 200 cars. The attendance and sales figures were the highest ever for the exhibition. Mercedes-Benz Vietnam reported that it sold over 100 cars of various models at the show. Other brands sold at the show included Range Rover, BMW, Audi and Lexus.
Over the past few years, 3,000-5,000 luxury autos have been sold in Vietnam per year. The growth in sales has been steady. In 2013, Mercedes-Benz saw a 70 percent increase year on year in its sales. Audi and BMW also saw growth of around 50 percent.
Mercedes has reported that they view Vietnam as the fastest growing market for their cars in Asia. The car company entered Vietnam over 17 years ago and has maintained a leading position in the luxury market ever since. It currently has a market share of about 50 percent – one of its largest market shares in the world. Additionally, Mercedes is the only luxury car brand that has an assembling plant in Vietnam – in 2014, the company rolled out the first S-Class model to be wholly built within the country.
As more money continues to flow into Vietnam and the economy continues strengthening, it is clear that the luxury car market will have strong growth for many years to come.
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