Budget cars are a thing of the past.
With plummeting sales, ranging from only a few dozen to a few hundred units per month, car manufacturers no longer consider budget-friendly car models as strategic and do not exploit them as thoroughly as before.
Sales Decline
The Mitsubishi Xpander has garnered attention in the market with a total sales volume of 20,000 units in 2023. However, the base model, priced as the cheapest in the product range, only achieved a low sales figure of 1,902 units, while nearly 18,000 units were higher-end versions equipped with advanced technology and features.
Similarly, for the budget-friendly sedan model Mitsubishi Attrage, the company only sold over 5,000 units in the year, predominantly comprising higher-end versions. Regarding Suzuki's budget car line, Ertiga, only 3 units of the standard model were sold in 2023, while the hybrid variant saw sales figures reach 1,100 units.
In recent years, the Toyota brand has introduced a series of budget-friendly car models like Wigo, Avanza, or Raize to compete with both mainstream and premium car manufacturers. However, these models only achieved modest sales figures in 2023, with 1,748, 3,783, and 4,500 units respectively.
In the past, some budget-friendly models like the Kia Morning and Hyundai i10 were considered "sales kings" with around 20,000 units sold annually. However, recently, the appeal of these models has significantly diminished, resulting in a sharp decline in sales. The Kia Morning only sold 1,467 units last year, while the Hyundai i10 fared slightly better with over 7,000 units sold, thanks to having multiple variants.
Many other models priced from 450 million to under 600 million dong, such as Hyundai's Stargazer or Elantra, are also no longer popular, with annual sales reaching only a few thousand units, often due to fewer technological features and amenities compared to competitors.
Changing Consumer Needs and Psychology
The primary reason for the decline in popularity of budget car models, despite being previously favored by many customers, is due to changes in consumer needs and preferences, shifting towards a focus on higher-end models or lineups.
According to Ms. Nguyen Thi Ngan Ha, Sales Director of Phuong Nguyen Automobile Trading Service Company Limited, 70% - 80% of customers nowadays tend to choose higher-end car models because they prioritize safety for themselves and their families. Many car manufacturers also believe that consumers no longer view cars solely as convenient means of transportation but increasingly demand higher levels of safety and comfort.
Amidst changing consumer trends, Ford Vietnam's leadership has stated that the company will not introduce any more budget car models as it did in the past. The company has discontinued several budget models like the Fiesta, EcoSport, and Focus, focusing instead on developing and exploring higher-end models. An example is the brand-new Territory by Ford, with spacious dimensions, high ground clearance, and equipped with advanced safety technology and full amenities. Although priced not cheaply, around 800 - 900 million dong per unit, its sales volume in the past year still reached 9,000 units, demonstrating the success of the strategy focusing on higher-end models.
Mr. Thai Quang Huy, Sales Director of Saigon Gia Dinh Automobile Service Company Limited, explains that budget car models are experiencing a downturn because nowadays, manufacturers continuously introduce many new models with rich equipment and amenities at fairly reasonable prices, offering consumers many choices. By spending a few tens of millions to around 100 million dong more, customers can own a car model they desire, instead of opting for cheaper models lacking safety features.
Mr. Huy also noted: "Customers increasingly prioritize safety factors when choosing cars, followed by price considerations. Many people with around 300 - 400 million dong will choose to buy a used higher-end car rather than a new budget car."
Some automobile businesses believe that a significant reason contributing to the declining appeal of budget car models is the sharp reduction in demand for commercial service use due to the COVID-19 pandemic and prolonged economic difficulties. Additionally, service users are becoming more selective, preferring service providers with newer and more spacious vehicles for a comfortable experience.
Why Shouldn't You Choose an Overly Small Car?
Mr. Nguyen Minh Dong, an automotive expert, has advised against choosing overly small car models because when driving on major roads or highways at high speeds, small-sized cars can feel unstable and unsafe. He recommends customers opt for models with sturdy structures, equipped with various safety technologies to feel more secure and reduce the risk in case of collisions.
Original article by AutoPro
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