Škoda Auto in Vietnam started selling two of its models – Karoq and Kodiaq – this week. This is one of the first steps that the company has taken as part of its goal – to establish itself in Southeast Asia. In the following years, it plans to expand the portfolio of imported models and start production itself in the upcoming factory in the Viet Hung Industrial Park.
In connection with the brand’s entry into the new market, the editors of Seznam Zpráv visited one of the first dealerships in Hanoi before the official opening. Despite the fact that the store is located in the busy center of the capital, it has a very European feel. In the newly furnished premises, in addition to car models, the operator also displays smaller advertising goods with the car company’s logo, and when looking inside, only a small sacrificial altar reminds of Vietnam.
Although the market for new cars has been dominated by Korean and Japanese brands for the past twenty years, and sales have not been doing very well in the last year due to the difficult economic situation in the country, according to Chi Van Tuyen, manager of the Škoda Auto dealer network in Vietnam, the European car manufacturer has a chance to establish itself .
According to him, an important part of the strategy of how to sell the new brand in the country will mainly be the traditionally good relations between the Czech Republic and Vietnam, as well as customers who already have experience with the Czech car company.
“In connection with entering the Vietnamese market, we are communicating with fifteen special guests who previously lived in Czechoslovakia, studied there, worked and finally returned to Vietnam. Here today they do business or work in very high positions in large companies or in government offices. When they learned that we had a plan to present Škoda Auto on the market, they offered us to become ambassadors and spread awareness about the cars among potential customers,” Chi Van Tuyen, manager of the Škoda Auto dealer network, describes the strategy.
What is important, he said, is that all the ambassadors are currently between 60 and 70 years old and have a very good reputation and a high position in society.
“In general, in Asian countries and especially in Vietnam, we traditionally listen to older and experienced people. I think this plan could work very well and attract new customers,” said the manager.
Residents there can also be convinced to choose a Škoda Auto car model by the brand’s commitment to the country, which is the factory under construction. “So potential customers know that the brand is going to be here for the long term,” explained Chi Van Tuyen.
Price of cars in Vietnam
However, the European car will not be for everyone. In terms of price, the car manufacturer aims more at the upper middle class. The brand will offer the Karoq model for 940,000 crowns. Kodiaq then from 1.1 million crowns. The price of the models is higher than in the Czech Republic, because customs and transport costs increase it.
For comparison – for example, the best-selling car on the Vietnamese market, the Toyota Vios, sells for roughly half a million crowns.
“In Vietnam, the average customer who buys a new car spends around 25,000 to 35,000 euros,” confirms an expert during a visit to a dealership.
However, according to him, the price of the models could decrease over time, specifically from the moment when the assembly of cars in Vietnam begins. “We could then approach this price range,” he adds.
In addition, Vietnamese buyers still very often finance cars in cash, although the proportion of those who use a bank for payment is gradually increasing.
“Previously, domestic residents paid, and to some extent it still is, mainly in cash. That is why you can also see ATMs at all brand showrooms. I would say that about a third of buyers still use cash,” added the manager.
However, customers on the Vietnamese market also have their own specifics, especially from the point of view of the car’s equipment.
“Traffic is very busy here. In addition to mandatory equipment, customers therefore very often require navigation as part of the car. For example, Hanoi is huge and you need to navigate it quickly while driving. In addition, the roads here are quite narrow, which is why a large number of buyers also require a parking system, such as front and rear sensors as well as a camera,” says Chi Van Tuyen, manager of the Škoda Auto dealer network in Vietnam.
The car market in Vietnam is growing
Despite the current unfavorable situation in the automobile market, where car sales in the first five months of this year recorded a decrease of 43% compared to the same period last year, the market in Vietnam has been growing in recent years.
According to data from the Vietnam Automobile Association (VAMA), it is the fourth largest outlet in Southeast Asia. There are only 38 vehicles per 1000 inhabitants, while the total population is approximately 100 million people.
“This, together with further expected economic development, makes Vietnam the country with the highest potential for growth in the entire region,” estimates Škoda Auto.
The trip to Vietnam for the official market entry was financed by Škoda Auto.