Car dealers shut down as competition bites

About 21,600 car dealers in Vietnam have halted operation, shut down or gone bankrupt as of August 29, according to the Business Registration Management Agency.

About 21,600 car dealers in Vietnam have halted operation, shut down or gone bankrupt as of August 29, according to the Business Registration Management Agency.

  

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2,900 car dealers went bankrupt, accounting for 40% of all bankrupted firms in 2017. Nearly 7,000 halted operations and 12,000 firms have shut down. On average, 90 firms leave the market every day.

The number of bankrupted or dissolved car dealers is between double to five times higher in processing, manufacturing or hospitality industries.

The Business Registration Management Agency said the high number of dissolved firms show the difficulties particularly facing small and medium sized businesses. 7,146 firms, accounting for 92.2% of all dissolved firms, have less than VND10bn (USD440,000) in registered capital.

Many small and individual firms can't afford their own warranty and maintenance facilities. In addition, competition is becoming tougher as import tax for cars from ASEAN countries have been cut from 40% to 30%.

In mid-August, the Ministry of Finance proposed to tighten management over the import of second-hand cars which is the main source of income for various small and medium-sized firms. These cars will face higher import taxes.

There is also a proposal to raise excise tax for pick-up trucks from 15-25% to 30-54% from 2019.