BMI Revises Forecast As Vehicle Tariffs Take Their Toll

Vietnam's new vehicle market is characterised by fluctuating tariffs, which often make it hard to identify sustainable sales patterns. After there was evidence of tariff changes kicking in as sales for Q110 were down by 2%, despite an 80% increase in passenger car sales, total sales had returned to positive growth of 5% by the end of H110, although passenger car growth was lower at 29%. The MPV/SUV segment is still impacted by the higher special consumption tax with sales down 10%, while commercial vehicle sales were up just 2% y-o-y. While we believe that consumers appear to be adjusting to the new tax, as shown in the improvement during Q210, we have lowered our forecast for sales of domestically-produced vehicles to growth of 7.8%. This allows for some further growth in Q310, although from there on we believe the results of Q409, which were inflated by tax cuts, will be difficult to replicate.

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