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But some dealers said over the last couple of months they have been struggling to sell one car a month.

A car dealer in HCMC’s District 5, who did not wish to be named, said he had advertised the 12 remaining cars in one of his shops at 15-20 percent below cost.

“We once had three shops and each month we stocked 30 or 40 new cars,” he said. “But sales dropped and we had to sell one shop to repay bank loans.”

Vietnam’s new car sales fell by 37 percent in October from the same month last year to 5,679 units. Sales dropped off because of higher taxes and registration fees, the Vietnam Automobile Manufacturers Association said in its monthly report.

Dealers have said demand could remain slow for the rest of the year after the government’s August decision to triple registration fees to 15 percent of a car’s purchase price.

Vo Hoang Hung, another car shop owner in District 10, said after banks tightened lending and the tariff on imported cars rose to 83 percent from 70 percent, many dealers ran out of money. As a result, they had to sell some of their cars to other dealers so that they could keep afloat.

Thinking it was a chance to earn profits, Hung bought five cars, worth up to US$65,000 each. But a week later, the price of the cars dropped by about 10 percent as dealers in the north lowered prices to stimulate demand.

“So I lost several thousands of dollars on each car,” Hung said.

Experts said the domestic car market has been slow recently mainly because automobile import taxes were raised to curb the trade deficit and reduce traffic jams. The global economic slowdown has also had an impact on consumer spending.

Many car makers, however, are optimistic about the future, saying the difficulties will soon disappear. Toyota Motor Vietnam and EuroAuto Corp., for instance, have expanded their businesses and opened many large showrooms this year.

Huynh Du An, general director of EuroAuto Corp., the distributor of BMW cars in Vietnam, said he expected sales to pick up by the Tet (Lunar New Year) holidays as both car makers and dealers lower prices to attract buyers.

Many manufacturers have started removing unnecessary car interior components while car shops are sacrificing profit margins to try to lower prices.

At the Saigon Autotech 2008 Exhibition in HCMC earlier this month, industry insiders said Vietnam’s car market still had great potential and businesses needed to introduce more products that suited the local market.

Though the number of cars sold fell last month, the 16 auto makers that make up the Vietnam Automobile Manufacturers Association reported a 64 percent jump in sales in the first 10 months from the same period in 2007 to a record 95,736 units.

Analysts said under World Trade Organization commitments, foreign car companies will be allowed to open dealerships and distribute imported cars from next year. Therefore, local businesses will need to prepare for increased competition and try to bring the selling prices of cars closer to their actual prices, analysts said.

Source: SGGP