According to recent data from the General Statistics Office, nearly 190,000 vehicles were manufactured domestically in the first five months of 2025, marking a year-on-year increase of over 70 per cent. Imported completely built units (CBUs) also reached nearly 90,000, up 43 per cent.
This brings the total number of new vehicles entering the market to nearly 280,000, excluding tens of thousands of unsold units carried over from the previous year. Total supply has now exceeded 300,000 units, a record level in the context of declining consumer demand.
Only about half of these vehicles have been sold. It is estimated that roughly 150,000 units remain in stock at factories, dealerships and warehouses.
Dealers say this is the most severe inventory backlog they have seen in five years. "Imported cars have been filling up our lots since March, and domestically assembled models are still being delivered from factories, but foot traffic is just 30 per cent of what it was this time last year," a dealership manager in Ho Chi Minh City said.
Both mass-market and luxury brands, such as BMW, Mercedes-Benz, and Lexus, have launched aggressive promotions, including financial support, free insurance, and accessories; however, the market response has remained sluggish.
To reduce financial pressure, many dealers have stopped accepting new deliveries or slashed orders. Some have resorted to selling vehicles at a loss to recover their capital. With manufacturer rebates of just 5-6 per cent per vehicle, dealers are forced to forgo their margins or cut even deeper to attract buyers. Rising interest payments on bank loans, often required upfront to receive vehicles from manufacturers, have only worsened the financial strain.
Heavy promotions fail to lift sales
To clear inventory, automakers have launched a series of major promotional campaigns, including deep price cuts, full registration fee coverage, and zero-interest financing.
Toyota Vietnam recently offered full registration fee support for its Veloz Cross and Avanza Premio models, with savings of up to VND 66 million (approximately USD 2,590). Toyota Finance also launched a promotional loan package with interest rates as low as 1.99 per cent per year.
Honda Vietnam followed suit with full fee support for the Honda City, 50 per cent for the CR-V (L and G variants) and HR-V (G variant), along with free insurance and financing deals for other models.
Mitsubishi is covering registration fees for its entire lineup, offering up to 100 per cent support for the Attrage MT and 50 per cent for other versions, in addition to gifts and accessories. Still, dealers report that showroom traffic remains low.
Industry experts attribute the oversupply largely to overly optimistic projections of post-pandemic economic recovery and pent-up consumer demand following years of restrained spending between 2021 and 2023. In reality, high auto loan interest rates, rising living costs, fuel prices and insurance premiums are making buyers increasingly cautious.
Pham Quang Thang, sales director at Hanoi Auto JSC, noted that the market remains quiet due to lingering economic challenges and regulatory changes. "Changes in vehicle registration procedures have confused many buyers and extended processing times by up to two weeks. Tighter controls in various industries have also dented auto demand," he added.
Another contributing factor is that manufacturers still expect growth in Vietnam's market potential, particularly as auto sales in regional markets such as Thailand have slowed. As a result, more vehicles from Thailand and Indonesia, key production hubs, are being redirected to Vietnam.
Tran Dinh Ky, deputy general director of Moveo New City, stated that some dealers are being compelled to accept more vehicles to assist manufacturers in testing the market. At the same time, delays in customs clearance are restricting the flow of imports.
Manufacturers expected to cut production, adjust imports
In response, many automakers are considering cutting production and scaling back imports for the second half of the year.
Dao Cong Quyet, a representative of the Vietnam Automobile Manufacturers' Association (VAMA), said, "This current oversupply is the result of plans made late last year, based on expectations of strong growth in the first half of 2025. Now that demand has weakened, manufacturers are likely to adjust their forecasts and plans for the second half to rebalance the market."