Vietnamese consumers shun low-cost cars, see them as ‘low quality’

Vietnamese consumers shun low-cost cars, see them as ‘low quality’

VietNamNet Bridge – Most low-cost cars introduced in Vietnam have failed to win the hearts of consumers, as many Vietnamese equate low-cost with low-quality.

Consumers are justifiably skeptical about the quality of low-cost car models because of the history of Chinese low-cost cars in Vietnam.

In 2009, the Chinese Chery QQ3 hit the Vietnamese market at the quoted price of VND195 million, a very attractive level for many Vietnamese, whose annual income was less than $1,000 per annum at the time.

However, Vietnamese consumers were not very interested in low-cost car models. About 146 Chery QQ3 were sold in 2012, and only one sold in the first eight months of 2013. There have been no sales of the car since then.

The Chinese BYD F0 model faced the same situation. Priced at VND252-282 million, the 1.0L BYD F0 targeted the low-cost car market segment. However, the model also failed to get a foothold in the market.

A car dealer said he decided to stop selling BYD F0 because of low demand and overly high maintenance costs. At first, sales went smoothly thanks to the low price, which was one-third of the price for a Toyota Aygo, a model with a similar appearance.

However, the car dealer found that the number of cars that broke down one year later was high, resulting in higher maintenance costs. After three years of suffering from slow sales and high business costs, he stopped selling the cars and providing post-sale services.

Hitting the Vietnamese market in June 2010, the Chery Riich M1, a hatchback model, was considered the direct rival to Kia Morning and Chevrolet Spark. Despite the low selling price of VND288 million, only 50 cars were sold after four years.

Analysts said that the Riich M1 suffered the biggest failure in Vietnam.

Following Chinese footsteps?

Despite these setbacks experienced by Chinese car makers, other manufacturers did not shrink from entering the market. A businessman announced that he would bring India’s Tata Nano, the cheapest model in the world, to Vietnam.

In late 2012, he brought two Tata Nanos to Vietnam and introduced them to car dealers.

As the domestic market seemingly showed little interest in the car, the businessman decided to assemble cars in Vietnam under the mode of CKD (complete knock down) to reduce the price.

In India, Tata in January 2014 launched the Nano Twist with many modern features, selling for $4,000.

According to analysts, if Nano Twist were assembled in Vietnam, it would be 20-25 percent cheaper than imports under the mode of CBU (complete built unit).

It is estimated that Nano Twist CBU imports would be priced at $10,000, but if the car was assembled in Vietnam it would cost $7,500-8,000.

However, analysts do not think Tata’s models will succeed in Vietnam, simply because many Vietnamese believe that low-cost products mean low-quality products. Vietnamese would rather buy a luxurious scooter than a low-cost car, though both have the same prices.

Tran Thuy

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