Car dealers experience hardships amid weak demand

Car trading companies are complaining about high inventories and sharp profit decreases as people have cancelled car purchase plans amid Covid-19.

Savico’s finance report shows that its revenue in Q2 was VND3.107 trillion and post-tax profit VND15.3 billion, a decrease of 29 percent and 56 percent, respectively, in comparison with the same period last year.

Its cumulative revenue in H1 was VND6.253 trillion, or 27 percent lower than H1 2019, while the post-tax profit dropped by 79 percent to VND24.1 billion.

Savico distributes cars, and provides repair and maintenance services. It has 50 sales agents which distribute cars for many brands.

City Auto, the distributor of Ford and Hyundai products in Vietnam, is in the same situation. Its H1 finance report showed that revenue from sale and services was VND2.151 trillion, a sharp decline compared with the VND2.945 trillion H1 2019.

The post-tax profit dropped from VND48.6 billion to VND783.1 million. Meanwhile, the profit of the holding company plunged from VND42 billion to VND1.3 billion, or 97 percent.

Car trading companies are complaining about high inventories and sharp profit decreases as people have cancelled car purchase plans amid Covid-19.

Haxaco, which distributes Mercedes cars, reported a 68.5 percent decrease in post-tax profit of Q2 to VND8 billion. In H1, the company got VND2.01 trillion in revenue, a decrease of 13 percent, and earned VND11 billion in post-tax profit, a decrease of 62.3 percent.

As retail has been going slowly, car assemblers and importers have also suffered. VEAM, a partner in three automobile joint ventures, Toyota Vietnam, Honda Vietnam and Ford Vietnam, reported VND790 billion in profit from the three companies, just 37.5 percent of Q2 2019.

In H1, it had VND1.165 trillion worth of profit sharing from joint ventures and affiliated companies.

As for truck manufacturing, TMT JSC reported profit of VND1.183 billion in H1, or 10 percent lower than the same period last year.

MOIT confirmed that all enterprises in the automobile industry, from manufacturers and assemblers, to importers and retailers, have seen their revenue drop sharply in H1.

According to VAMA, automobile manufacturers faced difficulties in H1 because of the impact of Covid-19. Most companies have had to recalculate their production and business targets for 2020 in new conditions.

Because of social distancing, enterprises could not organize production in the first half of Q2. In May and June, the demand was still very weak, which led to the sharp fall in sales in the entire system.

The current situation is different from 2018, when demand was strong and supply could not satisfy demand. Buyers had to pay additional money to get deliveries quickly. It was estimated that for the 10 best selling models alone, customers had to pay VND1 trillion more to get quick deliveries. 

Tran Thuy

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