Auto lending growing rapidly in Viet Nam
Auto lending growing rapidly in Viet Nam
Auto lending in Viet Nam recorded faster growth than other Southeast Asian emerging markets in the period between 2011 and 2016, according to a research by Singapore-based The Asian Banker.
This will continue in the next two years, the research has predicted. The research found that Viet Nam had seen a significant increase in auto lending during the past few years, driven by rapid economic growth, improving purchasing power and a growing middle class.
The Asian Banker said that auto lending would experience extraordinary growth in Viet Nam.
“We expect that car ownership will continue to increase in Viet Nam in the coming years, as the increasing demand for passenger vehicles is also driven by infrastructure improvements and lower car prices,” The Asian Banker said in a press release.
“More consumers are switching to cars from motorcycles, as deteriorating traffic congestion and air quality in Viet Nam’s major cities make driving cars a preferred choice. Moreover, cars are considered as status symbols in the country.”
The growth rate of auto lending was forecast to be around 35 per cent per year in 2017-18 to touch around VND120 trillion (US$5.2 billion) by 2018.
Auto lending in Viet Nam totalled some VND60 trillion, representing a year-on-year increase of more than 40 per cent.
Viet Nam made up around 4 per cent of the gross auto lending in Southeast Asian emerging markets in 2016. The Asian Banker anticipated that Viet Nam’s share would go up to 6 per cent in 2018.
Bank auto lending to individual consumers was expected to expand at a compound annual growth rate of around 7 per cent in five Southeast Asian emerging markets, including Indonesia, Malaysia, the Philippines, Thailand and Viet Nam.
Growth was expected to be sustained beyond 2018 due to factors such as favourable economic environments, increasing consumer purchasing power, relatively young populations with large and growing middle classes, low car ownership, and low auto finance penetration rates in the region, despite the rise of ridesharing services and competition from non-bank auto financing companies.
In 2018, bank auto lending within these markets is estimated to be worth around $93 billion in total, according to The Asian Banker.
