Auto sales slump as Lao economy slows
Auto sales slump as Lao economy slows
Car dealerships in Vientiane are struggling as the demand for vehicles bottoms out, with many offering special promotions to tempt customers.
Salesroom managers along Vientiane' s Road T2, where many showrooms are located, say the slump in demand is forcing them to introduce new marketing strategies.
“We are offering low interest loans to people who want to buy a car from us,” said a sales assistant at one dealership. “The interest on a loan used to be 0.85 percent a month but now we've cut it to 0.65 percent.”
He also said pr ices would not be fixed as in the past, adding that they would be negotiable and would depend on the payment method. The repayment installment period has also been extended from five to seven years.
Some dealerships are offering zero interest loans in a bid to attract new customers.
According to the Ministry of Finance, vehicle imports have dropped by 38 percent compared to last year. Plummeting sa les have contributed to the decline in national revenue collection.
In 2014, Laos imported 52,386 vehicles with the figure dropping to 32,692 units in 2015 – the lowest number in the past four years.
Many car dealers said demand had been declining since last year, citing a slight downturn in economic growth which is forecast to be 7.5 percent this year, down from 8 percent the previous year.
They said vehicle sales peaked in 2011 and 2012 due to a surge in demand. Strong economic growth and greater purchasing power among Vientiane residents drove sales to an all-time high.
Analysis shows that many people now own cars so have no need to buy another one. This is cited as the main reason for the slump in sales. However, demand is expected to rebound in the next two years once the economy recovers.
The downturn in demand for cars will force dealers to adjust their prices so they can continue to make sales and keep their business afloat. They certainly won't be asking high prices at a time of declining purchasing power.
