Automotive demand in 2022 is estimated to increase 16%

Automotive market Vietnam has just experienced 2021 with many changes. The outbreak of the 4th wave of COVID-19 disease in many provinces and cities, along with the onset of electric cars, partly affected consumers’ tastes and choices, along with a series of vehicle recalls to fix manufacturers’ faults.

According to the General Statistics Office, in 2021, the production index of motor vehicles increased by 12.9% and the production index of spare parts and auxiliary parts for motor vehicles and engine vehicles increased by 6. 8% compared to 2020. In which, the production of a number of industrial products supporting the automobile industry grew quite well compared to 2020 such as other equipment used for engines of motor vehicles with an increase of 15.44%; synthetic rubber and oil-derivative rubber substitutes, in primary forms or sheets or strip, increased by 14.09%; ignition wire sets and other wire sets used for motor vehicles increased by 4.65%. In contrast, production of other parts for motor vehicles decreased by 2.75%.

Sales of many automakers will decline in 2021 due to the impact of the COVID-19 epidemic.

The 4th wave of COVID-19 outbreaks in many provinces and cities in 2021 has inhibited the recovery of the auto market. Following the anti-epidemic directive of the local authorities, many auto dealers of Toyota, Ford, Mitsubishi… in Hanoi and Ho Chi Minh City had to temporarily suspend operations.

Not only sales, but also car factories of some automakers were affected by the prolonged shortage of chips and assembled components due to the disruption of the global supply chain. Besides, the purchasing power dropped, especially in June – September 2021, causing auto sales in Vietnam to drop to a record.

In the context of difficulties for the auto industry due to the impact of the Covid-19 pandemic, the Government has issued a policy to reduce registration fees by 50% for locally assembled and manufactured cars. Accordingly, Decree 103/2021/ND-CP was issued by the Government, effective from December 1, 2021 to May 31, 2022, providing for the calculation of the first registration fee for cars, trailers and trucks. trailers or semi-trailers pulled by cars and similar vehicles manufactured and assembled in the country equal to 50% of the registration fee for these vehicles specified in Decree No. 20/2019/ Decree-CP and decisions of the People’s Committees of provinces and centrally run cities.

This is the second time in the past two years that the government has issued a policy to reduce registration fees by 50% for domestically assembled and manufactured cars. Previously, from June 28, 2020 to the end of December 31, 2020, the policy of 50% reduction in registration fees was also applied, helping the Vietnamese auto market to have a strong recovery.

Outlook in 2022

Short-term uncertainties aside, the outlook for 2022 could be brighter with a relatively certain recovery. Currently, the short-term outlook of auto companies is still unstable because the epidemic is still complicated. However, with 70% of Vietnam’s population having received the second dose of vaccine by the end of 2021, and new COVID-19 variants are likely to pose less of a health risk, it is estimated the impact from the extension Social distancing will be less severe than in 2021.

According to the Center for Industry and Trade Information (Ministry of Industry and Trade), it is estimated that automobile demand in 2022 will increase by 16% over the same period last year. Together with the very low car ownership rate in Vietnam and the government’s 50% reduction in registration fees under Circular 103/2021/ND-CP, this could be a solid foundation for high growth in 2022. In addition, the new trend of using electric vehicles in Vietnam will drive the demand for cars even higher in 2022.

Vietnam’s auto industry will have strong growth potential in 2022.

The shortage of chip supply continues to reduce the supply of automobiles, the profit of car companies can achieve strong growth. According to forecasts by IHS Markit and Fitch Ratings, global vehicle production is estimated to decline by an average of 4% year-on-year in 2022, as chip supply shortages are expected to continue until the second half of the year. 2022.

“Many car companies have raised the selling price of new models in 2021 and it is estimated that this will have a clear impact on the auto market in 2022. Both car manufacturers and dealers will benefit from the difference. supply-demand imbalance in this short term”, a representative of the Center for Industry and Trade Information pointed out.

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