“Introduction of government policies (Reduction of SCT, ATIGA and VKFTA) coupled with rising number of inspection checks performed before selling a used car have driven the Vietnam Used Car Market”.
The report titled “Vietnam Used Car Market Outlook to 2025 – By Type (Sedans, SUV’s, MPVs, Hatchbacks, CTVs and Others), By Vehicle Age (0-2 Years, 2-4 Years, 4-6 Years and more than 6 Years), By Cities (Hanoi, HCMC, Hai Phong, Da Nang and Others) and By Brand (Toyota, Mazda, Kia, Honda, Ford, Chevrolet, Mitsubishi and Others)” by Ken Research (Online Market Research) suggested that the Vietnam Used Car Market has been increasing due to increasing middle class population coupled with faster car replacement period and introduction of government policies such as EVFTA and Ban on Motorbikes. The market is expected to register a positive CAGR of 11.2% in terms of sales volume during the forecast period 2018-2025E.
Reduction of Special Consumption Tax (SCT): The Vietnamese government in the year 2018 reduced SCT on vehicles with an engine size of 2.0 litres or less by 5%. Moreover, according to the ASEAN Trade in Goods Agreement, the government has also reduced the import tariffs from 50% to 35% in 2015 which further reduced to 20% in 2016 and 10% in 2017. In the year 2018, it was bought down to 0% which boosted the sale of used cars in the country.
Increasing Replacement Rate: The replacement rate of used vehicle in Vietnam is growing over the years largely due to the high resale value a seller gets on replacing a vehicle between 2-4 years of vehicle age. The dealership outlets keep replacing the cars with the fast moving models so as to ensure higher margins on the sale of such cars.
Strong Presence of Online Platforms: The use of social media platforms such as Facebook Marketplace along with online auto classifieds portals in Vietnam such as Oto and Carmudi have provided high user convenience to the buyers who are looking forward to purchase a used car as it provides the detailed description of all the listed used cars. The online medium drastically reduced the customer acquisition cost and increased the transparency which marked a level of trust and confidence thus increasing the sale of used cars in the country.
For more information, refer to Vietnam Used Car Market