After the Lunar New Year holidays, many people in Vietnam tend to choose investment channels over buying cars, resulting in a downward trend in the country's automobile production.

According to reports from the General Statistics Office, a total of 21,900 new vehicles were supplied in February, including domestically manufactured and imported cars. This represented decreases of 23.3% compared to January 2023 and 38.8% compared to the same period last year. 

Domestic automobile production was estimated at around 15,900 units, declines of 26.4% and 25.3% from January 2023 and the previous year respectively. This was the lowest output in many years. Total automobile production in the first two months was 37,500 units, down 9.8% year-on-year.

Imports of completely built-up cars totaled around 6,000 units in February, down 13.7% in volume and 19.3% in value from the previous month. Imports fell 51.3% and 54.9% in volume and value compared to the same period last year. For the first two months, imports were approximately 12,955 units worth $262 million USD, declines of 51.6% in volume and 54.3% in value year-on-year.

Experts attribute the decreases to the Lunar New Year holidays when many companies and factories closed. However, the largest ever declines in new vehicle inventory replenishment signal ongoing difficulties stimulating consumption.

The expiration of the government's 50% reduction in VAT at the start of 2024 may also impact domestic manufacturers' sales performances. In January 2024, sales fell 50% from December 2023 according to the Vietnam Automobile Manufacturers' Association.

As a result, brands are focusing on clearing existing 2022 inventory through promotions. One German brand's plant in Vietnam discounted prices by nearly 700,000,000 VND. Showroom workers said sales commonly halve after Lunar New Year as people invest instead of buy cars. Dealer discounts of 20-50 million VND have not been enough to attract more interest in the current market environment.