High car sales, disappointing profits

Five listed auto companies on the two stock exchanges reported combined profits of VND271 billion (US$12.2 million) in the first half of 2016, a drop of 56.4% from the same period last year.

Four of the five reported lower profits in the first six months, with Hoang Huy Investment Services Co (HHS) posting the largest year-on-year decline of 75.6%, down from VND336 billion in 2015 to VND82 billion in 2016.

TMT Motors Corporation (TMT) also saw its profits fall significantly to VND47 billion in the first six months of this year, down 66% year-on-year.

First-half profits of two other companies, Truong Long Auto & Technology Co (HTL) and Saigon General Service Corp (SVC), were also down 36.3% and 1.4%, respectively.

Only Hang Xanh Motors Service Co (HAX) saw its six-month profits inch up 2.1% to reach VND33.4 billion.

Hoang Huy explained that the company was focusing its investments on manufacturing new products, while other firms said higher discounts offered to their dealers pushed up sales costs.

According to the Vietnam Automobile Manufacturers Association (VAMA), car sales grew 31% in the first half of 2016.

The high increase was attributed to strong purchasing demand ahead of the adjustment in special consumption tax on cars, which went into effect on July 1, 2016.

Along with slumps in profits, share prices of most automobile companies have tumbled between 10% and 44%, except for the shares of Hang Xanh Co (HAX), which rose 8% since the beginning of the year.