Profits of businesses selling luxury cars have fallen dramatically

Car consumer demand has not improved significantly. The financial report for the third quarter of 2023 shows that many selling expenses have increased, which suggests that companies have “twisted” many solutions to boost car sales.

Revenue from repairs is better

The financial report for the third quarter of 2023 shows that the revenue of Hang Zan – HAXACO Automobile Services Joint Stock Company (HAX) reached more than 1,115 billion VND, down 43% compared to the third quarter of 2022. After deducting expenses, profit after tax was down 86% to slightly more than VND8.3 billion.

Cumulatively in the first 9 months of 2023, HEXACO’s revenue reached 2,905 billion VND, down about 44% over the same period.

Of which, revenue from car business reached 2,509 billion VND; decreased by 48%, revenue from repair services and spare parts sales increased by almost 4%, reaching more than 378 billion VND.

Various expenses like loan interest and business management of HAX for 9 months all increased. As a result, HAX’s profit after tax reached 14.5 billion VND after 9 months, down 92% over the same period.

On the website, Hexaco introduces itself as the leading entity in the distribution of Mercedes-Benz luxury cars in Vietnam with approximately 40% market share. Last year alone, when the market was good, pre-tax profit in 2022 exceeded VND300 billion, more than 41% of the plan. In 2023, the market will be much more difficult.

Commenting on third quarter business results, a Hexaco representative said demand for luxury cars has not improved significantly as consumers wait for more positive signs from the economy. Therefore, car sales in the first 9 months of 2023 will decline compared to the same period in 2022.

cost of goods sold increased

Difficulties in the automobile industry are no exception for City Auto (CTF) – the largest Ford vehicle distributor in Vietnam. CTF’s 3rd quarter 2023 financial report has just been announced, with profit after tax reaching more than 25 billion VND, down 36% compared to 3rd quarter 2022.

Although revenue increased by nearly 14%, reaching 1,692 billion VND, cost of goods sold increased more strongly, with gross profit down 40% in the CTF period, reaching only 80.5 billion VND. Interest expense for the third quarter also increased by more than 2.3 times, reaching VND41 billion.

Accumulated for 9 months, City Auto recorded net revenue of 4,905 billion VND, an increase of 21%. But cost of goods sold increased by 25% to VND 4,636 billion.

Bright spot of financial activities Revenue increased by 5 times to reach 134 billion VND. However, financing and selling costs also increased, reaching VND 111 billion and VND 192 billion, respectively. As a result, profit after tax was more than 39 billion VND, which decreased by half over the same period.

According to the explanation of the City Auto representative, the auto business market has not improved in the first 9 months of this year. Automobile consumer demand has also been seriously affected by the global recession.

In her explanation to the Securities Commission, Ms. Phan Thi Thu Thao, Director of Operations of Saigon General Services Joint Stock Company (Savico – SVC), also said that the business situation of the car market in the third quarter – 2023 faces many difficulties. Business costs increased to ensure continued sales while revenues from car sales did not increase.

On the website, Savico introduces 64 car dealers and is the No. 1 distributor in Vietnam. Apart from the automobile business, Savico also offers real estate and financial services.

In the newly announced consolidated financial report, Savico’s net revenue in this third quarter reached 5,030 billion VND, down 0.2% over the same period.

However, gross profit declined by 19.4% to VND354 billion. In addition to business management costs decreasing, both interest expense and selling expense increased.

As a result, Savico’s profit after tax reached VND8.6 billion, down nearly 95% over the same period. Accumulated in 9 months, Savico’s profit after tax is 33.4 billion VND, down 92%.