Vietnam SUV Market Outlook to 2030

Vietnam SUVs Market Overview

• Vietnam SUVs market is valued at USD 3.1 billion. This market is driven by a rising preference for versatile and robust vehicles, particularly among families and off-road enthusiasts. The demand for SUVs is further fueled by increasing disposable incomes and rapid urbanization, leading to higher vehicle ownership rates. Moreover, improvements in road infrastructure across both urban and rural areas have contributed to the growing popularity of SUVs, as they offer comfort, safety, and better terrain adaptability.

• Key regions such as Ho Chi Minh City, Hanoi, and Da Nang dominate the Vietnam SUVs market due to their higher population density, increased automotive demand, and urban affluence. Additionally, these cities are home to a growing middle class that seeks more premium and feature-rich vehicles. The expansion of automotive retail networks in these areas, coupled with government incentives for electric vehicles, has cemented their dominance in the overall market.
• Vietnam's Automobile Development Strategy aims to make the country a major automobile manufacturing hub by 2030. This includes specific targets for the SUV segment, particularly in promoting the production of electric and hybrid SUVs. In 2024, the government has committed to increasing the production capacity of domestic automobile manufacturers by offering tax incentives and infrastructure development. The strategy also focuses on improving the quality of vehicles produced in Vietnam, ensuring they meet international standards.

Vietnam SUVs Market Segmentation

By Engine Type: The Vietnam SUVs market is segmented by engine type into Internal Combustion Engine (ICE), Hybrid, and Electric. Recently, internal combustion engine (ICE) SUVs dominate the market due to their established infrastructure, widespread consumer familiarity, and relatively lower upfront costs. While electric vehicles are gaining traction, ICE vehicles have an extensive supply chain and higher availability of refueling stations, contributing to their continued market leadership. However, with the gradual implementation of stricter emission norms, hybrid and electric vehicles are poised for future growth.

By Vehicle Size: The Vietnam SUVs market is further segmented by vehicle size into Compact SUVs, Mid-size SUVs, and Full-size SUVs. Compact SUVs hold the largest share of the market, driven by their affordability and fuel efficiency. As urban areas continue to grow, compact SUVs are favored by city dwellers for their maneuverability in congested streets, while still offering the ruggedness and height that define the SUV segment. Mid-size and full-size SUVs, though popular among affluent consumers and rural users, occupy smaller portions of the market due to their higher price points and fuel consumption.

Vietnam SUVs Market Competitive Landscape

The Vietnam SUVs market is dominated by both local manufacturers and global automotive giants, each vying for a substantial market share. The landscape is shaped by product differentiation, pricing strategies, and increasing investments in electric vehicle infrastructure. The presence of local companies like VinFast alongside international players such as Toyota and Hyundai has created a competitive environment with diverse offerings. The introduction of electric and hybrid SUVs by major brands is also gaining momentum, making competition even more dynamic.

Vietnam SUVs Market Analysis

Growth Drivers

• Increasing Consumer Preference for Off-Road Vehicles: Vietnam's automotive landscape has seen a significant shift towards off-road capable SUVs due to the growing demand from both urban and rural consumers. According to the latest data from the World Bank, the rural population of Vietnam was reported at approximately59.83 millionin 2023. Urban consumers are also showing increased interest in off-road SUVs for recreational use.
• Expansion of Automotive Manufacturing in Vietnam: Vietnams automotive manufacturing sector is expanding rapidly. In 2024, the automotive sector employs over 1 million people, driven by foreign investments and government incentives aimed at reducing reliance on imports. Major automakers, including VinFast and Toyota, have increased their production capabilities to cater to both domestic and regional markets. This surge in local manufacturing capacity is enabling competitive pricing for locally produced SUVs.
• Rising Disposable Income and Urbanization: In 2024, Vietnams gross national income per capita reached USD 4,800, reflecting rising disposable income among the middle class. This economic growth, coupled with a 2.6% annual urbanization rate, is driving consumer demand for premium vehicles, including SUVs. As families transition from smaller sedans to larger, more versatile SUVs, manufacturers are tapping into this trend by offering affordable, feature-rich models that appeal to urban households.

Challenges

• High Import Tariffs on Luxury Models: Import tariffs on luxury vehicles, including premium SUVs, range between 60-70%, making it difficult for consumers to afford imported models. For example, the price of an imported luxury SUV such as the Mercedes-Benz G-Class is inflated by nearly USD 80,000 after taxes. This poses a challenge for the luxury SUV segment, limiting its consumer base to high-income individuals.
• Competition with Sedan and Crossover Segments: SUVs in Vietnam face stiff competition from sedans and crossovers, particularly in the lower price range. While SUVs appeal to families and off-road enthusiasts, sedans dominate the market due to their lower cost and better fuel efficiency. Crossovers are also increasingly popular, offering a balance between SUV capability and sedan affordability, posing a challenge for traditional SUVs to maintain their market share.

Vietnam SUVs Future Market Outlook

Vietnam SUVs market is expected to show significant growth driven by a combination of rising consumer demand, improvements in road infrastructure, and government policies supporting the automotive sector. The increasing availability of hybrid and electric SUVs, along with environmental awareness among consumers, will further contribute to the market's expansion. Companies are likely to invest more in electric and autonomous driving technologies, shaping the future of the SUV market.

Market Opportunities

• Growth of Electric and Hybrid SUVs: Vietnam's push towards cleaner energy presents a significant opportunity for the electric and hybrid SUV market. In 2024, the government announced a target of having 1 million electric vehicles on the road by 2028, providing incentives such as tax reductions for both consumers and manufacturers of electric vehicles. This policy shift has led automakers like VinFast to develop electric SUV models tailored for the Vietnamese market.
• Expansion into Rural Areas with Tougher Terrain: Vietnams rural regions, which cover approximately 62% of the country, present a growing opportunity for the SUV market. Rural consumers require durable, off-road-capable vehicles to navigate challenging terrains, such as mountainous and flood-prone areas. As infrastructure develops and rural economies grow, the demand for rugged SUVs is expected to rise, offering manufacturers a lucrative opportunity to meet the unique needs of rural customers.