The Potential is Huge, but the Purchasing Power is Weak

Thị trường ô tô cũ (used car market) in Vietnam has been in its infancy for decades, and it still has a long way to go. Meanwhile, the demand for used cars with good prices is increasing due to the considerably higher prices of new cars compared to other countries in the region.

The Fear of “Mixed Quality”

In the past, used car shops were mainly located in big cities. However, recently, there has been an emergence of used car trading services in rural areas. Nevertheless, these shops are mostly small-scale and operate unprofessionally. Some even engage in deceptive practices, leading to a lack of trust from customers.

According to Mr. Tạ Công Tiên, the owner of Chợ Xe Kiểu Mỹ (American Style Car Market), many used car businesses provide mixed quality cars, making it easy for customers to mistakenly buy damaged cars that require significant repairs. By the time the truth about the car’s actual condition is discovered, buyers are left with no choice but to sell it back to the shop at a much lower price, sometimes even half of what they paid for it.

Mr. Trần Hoàng Nam, a used car dealer in Thủ Đức City (Ho Chi Minh City), pointed out that many customers are being fooled by dealers who sell used cars at significantly higher prices than their actual value. This trend has resulted in a loss of trust in the used car market. Triệu Khắc Thiệp, Director of Chợ Tốt Xe (Good Car Market), also believes that most consumers lack trust in used cars and do not know which businesses offer good quality and reasonable prices.

According to Mr. Nguyễn Minh Đồng, an automotive expert, in Vietnam, a car loses about 5%-10% of its value after just one year of use. In contrast, in the United States and Europe, cars lose 25%-30% of their value in the same timeframe. Therefore, the used car market is thriving in many developed countries as people opt for used cars to save costs.

Huge Potential

Due to the limited development of the used car market in Vietnam, there is still significant room for growth. According to Tạ Công Tiên, there is news that some foreign corporations are eyeing the Vietnamese used car market and planning to enter the industry, which will likely lead to intense competition. However, domestic businesses still have the upper hand as foreign investors cannot fully understand the Vietnamese market overnight. It will take time to build a skilled team of car mechanics with years of experience.

Ms. Nguyễn Thị Hiền, the owner of the Ô tô Hiền system, believes that the used car market has the potential to thrive regardless of the economic conditions. When the economy is struggling, customers tend to buy used cars to get the best prices instead of buying new cars at exorbitant prices. Conversely, when the economy is prosperous, consumers have the financial means to buy new cars and therefore sell their used cars more frequently, making the used car market more dynamic. She highlighted the need for used car shops to upgrade their professionalism, transparency, and customer service to regain trust and drive the market’s growth.

According to Triệu Khắc Thiệp, the current monthly consumption of used cars, which is only a few hundred thousand vehicles, is significantly low compared to the approximately five million used cars in the country. He stressed the importance of large enterprises leading the market by standardizing car appraisal processes, ensuring transparency in quality and pricing, providing post-purchase support, and improving customer service. This will push smaller shops to learn and implement professional models to survive. Thiệp believes that achieving these goals will attract more customers, build trust, and contribute to the remarkable development of the used car market.

According to BlueWeave Consulting, a market research firm, the used car market in Vietnam has a huge potential for growth, with an estimated annual growth rate of 16.7%. It is projected to reach $23.12 billion by 2029.

Tỉ lệ người Việt sở hữu ô tô còn thấp (Low Car Ownership Rate in Vietnam)
On average, in Vietnam, 1,000 people own only 5 cars, a far cry from Japan’s ownership rate of 600-700 cars per 1,000 people. Therefore, there is great potential for the used car market in Vietnam to grow in the next five years, as a majority of car buyers are first-time buyers.

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