Vietnam’s largest automobile distributor braces for tumble in profits
Saigon General Service Corporation, the country’s largest auto distributor, expects profits to decline by VND150 billion (US$6.33 million) in 2023 amid forecasts of a turbulent year.
In its annual report released recently, Savico said the auto market faces challenges as high car loan interest rates and lack of credit since the fourth quarter of 2022meant businesses and individual consumers called off or delayed purchase plans.
Since September, demand has fallen to 60-70% of normal, leading to oversupply and high inventory costs.
“The market will need three to six months to rebalance. The securities and real estate markets are now in difficulty, and people do not have as much motivation for buying cars as before.”
Competition would be more intense than ever, and so Savico only expects profit before tax of be VND538 billion, down more than VND150 billion from last year, when it reported record earnings of VND688 billion ($29.3 million) after a 2.7-fold rise from 2021.It was higher than the combined figures of the previous two years.
But it also expects revenues to grow by at least 20%.
Savico, the distributor of Toyota, Honda, Ford, Mitsubishi, and Volvo cars, plans to expand its distribution network and sell new brands.
Last year the industry enjoyed record profits as demand recovered after a two-year slump due to Covid-19.