Vietnam Bucks ASEAN Car Sales Slump as Chinese EVs Power Growth

 

Vietnam's car market has defied the trend in Southeast Asia, recording a robust 24% year-on-year sales increase in the first quarter of 2025.

 

This growth outpaced larger automotive markets in the ASEAN-5, driven by a favourable economic climate within the country.

 

Data compiled by Nikkei Asia, covering January to March sales across five key Southeast Asian markets – Indonesia, Malaysia, Thailand, the Philippines, and Vietnam – revealed an overall 1.7% contraction in total car sales, amounting to approximately 732,898 units.

 

In contrast to the regional dip, Vietnam emerged as the ASEAN leader in sales growth, with a substantial 24% expansion compared to the same period last year. The Philippines also saw positive growth, with sales rising by 7%.

 

However, the three largest players in the ASEAN automotive sector – Indonesia, Malaysia, and Thailand – all experienced a decline in sales growth.

 

Indonesia, the largest market, saw a 5% reduction, while both Malaysia and Thailand reported a 7% decrease.

 

The Vietnamese market's expansion was spearheaded by a surge in "hybrid vehicle" sales, which jumped by an impressive 80% year-on-year to 2,562 units.

 

A wave of hybrid model launches from various manufacturers, including market leader "Toyota Motor" (around 14% market share) with its Camry Hybrid, and "Suzuki Motor" with its XL7 hybrid SUV launched in September, contributed significantly.
 

 

Commercial vehicles and lorries also played a crucial role in Vietnam's sales growth, increasing by 22% to 15,445 units and 21% to 13,400 units respectively, potentially linked to increased government infrastructure spending.

 

During the first quarter, the Hanoi government increased public investment in an effort to cushion the economy from trade war impacts, with spending rising by 19.8% year-on-year to $4.67 billion.

 

Thuc Than, an industrial analyst at Vietcap Securities, anticipates a 15% growth in Vietnam's passenger car sales for 2025 (excluding VinFast and some luxury marques).

 

This forecast is underpinned by improving consumer spending, continued attractive sales incentives from car firms, and the introduction of more affordable models.

 

"However, our forecast doesn't yet factor in potential negative effects from ongoing tariff negotiations. Our base case is that Vietnam's tariffs could be around 5-10% higher than the average, and higher rates could risk impacting our sales or delivery forecasts," the analyst cautioned.

 

It's important to note that official figures from the Vietnam Automobile Manufacturers' Association exclude sales from domestic electric vehicle manufacturer "VinFast" (listed on the Nasdaq) and "Hyundai Motor" sales handled by the Thanh Cong Group.

 

VinFast itself sold 35,100 vehicles in the first quarter, while Hyundai's sales reached 11,464 units. Including these figures would push Vietnam's total car sales to 118,813 units, surpassing the Philippines' 117,074 and placing Vietnam fourth in ASEAN for the first time.
 

 

The "Philippines," another of Southeast Asia's top five automotive markets, also saw growth in the last quarter, with sales increasing by 7% to 117,074 units.

 

While passenger car sales dipped by 13.7%, commercial vehicle sales rose by 13.9%. Electric and hybrid vehicle sales reached 4,544 units, representing 5.73% of total sales.

 

In "Thailand," however, first-quarter car sales fell by 7% year-on-year to 153,193 units.

 

Sales of pickup trucks declined by 13% to 40,475 units, and internal combustion engine (ICE) passenger car sales dropped by 14% to 37,555 units.

 

Electric vehicle sales saw a 19% increase to 22,737 units, led by Chinese brands like "BYD," whose sales in March were 2.8 times higher than the previous year, reaching 3,204 units.

 

Despite the year-on-year decline, Thailand's car sales did see a 14% quarter-on-quarter increase from Q4 2024, reaching the 150,000 mark for the first time in four quarters.

 

While the first quarter typically sees lower sales after the Christmas and New Year shopping period, the recent uptick in Thailand may be partly attributed to "promotions and price cuts by car manufacturers" following earlier market pressure from high household debt, which led banks to tighten auto loan approvals.

 

Meanwhile, "Malaysia," which overtook Thailand as ASEAN's second-largest car market last year and edged closer to top-placed Indonesia, experienced a slowdown.

 

First-quarter sales fell by 7.4% year-on-year to 188,100 units as the market began to normalise after clearing previous order backlogs.

 

Data from Hong Leong Investment Bank indicated a sluggish start to the year, with sales recovering only in March, which saw a 2.2% increase to 72,700 units, boosted by aggressive manufacturer campaigns.

 

Industry insiders anticipate a rise in Malaysian EV sales for the rest of the year, with competition heating up between "Chinese brands" and "local manufacturers."

 

National carmaker "Proton" recently revealed that its first EV, the e.MAS 7, launched last December, has received over 5,500 bookings with over 1,800 deliveries. The company expects to launch a second EV model this year.

 

Chinese manufacturer "Great Wall Motor" stated that "around 13-14 Chinese car companies will enter the Malaysian market by the end of this year."

 

A sales executive at Great Wall noted the competitive pricing and affordability of Chinese brands, adding that Malaysian consumers are "car crazy," owning more vehicles per capita than other ASEAN nations.