Purchasing power remains weak in car market, resulting in increase in inventory

The domestic car market is experiencing an abundant supply, with a significant surge in the production of locally assembled and imported vehicles. However, a sharp decline in purchasing power has led to considerable challenges for the automotive industry.

In early July 2025, the auto market welcomed a new electric vehicle model from China's BYD, part of a broader wave of product launches amid an oversupply crisis in the Chinese auto industry, prompting increased exports to global markets.

In the first half of 2025, six models from Chinese brands, including BYD, Jaecoo, MG, Geely, and Haval, were introduced in Vietnam. The second half of the year is anticipated to see additional brands like Omada C7, Lynk & Co 08, and a range of electric vehicles from TMT Motors.

According to a recent report from the General Statistics Office under the Ministry of Finance, domestic automobile manufacturers produced an estimated 226,500 vehicles in the first six months of 2025, a 70.2 percent increase compared to the same period in 2024.

For imported vehicles, approximately 103,713 cars were imported into Vietnam during this period, valued at $2.23 billion, reflecting a 39.5 percent rise in volume and a 44.5 percent increase in value compared to the first half of 2024.

Additionally, of tens of thousands of vehicles in stock from 2024, about 50 percent have been sold. Currently, an estimated 150,000 vehicles remain in inventory at factories, dealerships, and storage yards.

According to Deputy General Director of Moveo New City Joint Stock Company Tran Dinh Ky, inventory levels for vehicles are at a 5-year high. Imported cars have filled the warehouse since March 2025, domestically assembled cars are also continuously pushed into the market by the factory, but the number of customers coming to the showroom is only 30 percent against the same period last year.

To prepare for the upcoming lunar month of July, in mid-July, many popular car models are offered with substantial price reductions ranging from VND50 million to VND100 million off the listed price, inclusive of incentives providing 100 percent coverage for registration fees, body insurance, and accessory insurance. Some Lexus, BMW, Mercedes-Benz models are directly discounted by VND100 million-VND300 million with a preferential interest rate loan package for 12 months. However, customers are still hesitant because car loan interest rates are still high, insurance prices, gasoline and living expenses are increasing.

Securing buyers for used vehicles is challenging

The used car market in Ho Chi Minh City experienced a quiet first half of 2025, characterized by sluggish transaction volumes. Many showrooms are currently operating at a standstill, awaiting signs of market recovery. While a few used car models, such as the Toyota Vios, older generation Innova, and Mitsubishi Xpander, remain in demand, sales for numerous other models have been slow.

Pham Van Manh, owner of a used car showroom on Phan Van Tri Street in An Nhon Ward expressed his concern saying that in a weak month in previous years, the showroom would typically sell around 10 to 15 cars. However, this year, there have been months where the showroom staff only managed to sell three or four vehicles. Customer traffic is low, and cars displayed for two to three months often remain unsold. He moaned that to achieve a quick sale, the showroom had no choice but to force to incur losses.

At another used car showroom located on Highway 13 in Hiep Binh Ward, business conditions are similarly challenging. Used car showroom owner Dang Nghia described the current period as a significant low season for the used car market.

He added that customers are primarily visiting to check prices and are only committing to purchases if the price is exceptionally low. Some buyers even propose prices tens of millions of Vietnamese dong below the acquisition cost, making it impossible to sell without losing money.

Used car dealers note a clear slowdown in the popular segment priced under VND500 million, which was previously a common choice for first-time car buyers. Nguyen Ngoc Thanh, owner of a used car showroom in Hiep Binh Ward, commented that used cars were traditionally chosen by buyers seeking cost savings. However, substantial discounts on new cars, coupled with registration fee promotions, have led many buyers to opt for new vehicles for the added assurance.

Le Anh Tuan, an independent auto market analyst, identifies three main factors contributing to the current decline in the used car market.

Chief among these is the fierce competition coming from the new car sector. Since the start of 2025, manufacturers spanning major brands like Ford, Mazda, Toyota, Hyundai, KIA, Mitsubishi, and various Chinese automakers have been consistently rolling out aggressive direct discount programs, registration support, and financial incentives. This push has been so significant that, at times, some B-class sedan models have seen their prices drop to just over VND400-500 million. This sharp decline in new car prices has fundamentally undercut the value of used vehicles, making it difficult for even cheaper options to hold their ground on price.

Adding to the pressure, consumers are showing reluctance to commit to purchases, often choosing to wait until later in 2025 in anticipation of potentially better incentives.

Finally, technical factors are also making potential buyers wary. New regulations concerning emission testing and vehicle registration have started being strictly enforced. This creates hurdles for many older car models, frequently requiring costly component replacements or major maintenance for owners just to pass inspection, adding significant expenses.