Buyers are comparing every new model in the same C-segment as the Mazda CX-5 and Hyundai Palisade, since those two models debuted with the lowest prices in the segment.
In July, automaker Thaco Group introduced the upgraded mid-cycle version of its 2023 Mazda CX-5, featuring improvements (in design, features and safety measures) and a surprisingly lower selling price . Three car variants were priced between VND749 million and VND829 million, making the CX-5 the cheapest in the segment.
The cheapest car in the C (medium) segment is also disruptive as it encroaches on the B (small) segment at less than 800 million VND.
“That’s enough to get a CX-5,” said one customer when considering purchasing a B-segment crossover.
The attractive price meant that the CX-5 far exceeded 1,200 units in June, 1,600 in July and 1,700 in August, making it the best-seller in the automotive market.
Automaker Hyundai Thanh Cong also adopted a similar strategy for its recently launched E-segment SUV Palisade, priced at VND1.47 billion to VND1.59 billion.
The price of the base version of the Palisade is 19 million VND higher than that of the top-end version of the D-segment Santa Fe (1.45 billion VND).
The Palisade is also enormously cheaper than its competitors, with the difference being VND800 million in the case of imported competitors like the Volkswagen Teramont and Ford Explorer (both above VND2.3 billion).
The CX-5 and Palisade undercut all newly released vehicles, whether in the same category or not.
The Palisade, in addition to the low price range, also enjoys a 50% reduction in registration fees, unlike its imported competitors.
To sell at these prices, automakers like Thaco and Hyundai Thanh Cong must have deep pockets and parent companies on board.
“Only when the parent company agrees to this policy can we implement it,” said senior Hyundai executive Thanh Cong.
“Timing is also key,” he said, referring to the ongoing crisis in the auto market that began in early 2023.
Demand has not yet picked up, despite constant promotions.
The Vietnam Automobile Manufacturers Association reported sales of 184,554 vehicles in the first eight months of this year, almost a third lower than last year’s 262,939.
A marketing expert who has worked for Japanese and German automakers said that in today’s auto market, if a company has financial strength, deep discounts could be a reasonable strategy.
Still, selling low could be risky, the expert warns, pointing out that if the product fails to provide perceived value to the consumer, the “cheap is bad” mantra could take over.
But the bottom line is that Thaco and Thanh Cong’s pricing strategies make the market more competitive and bring prices down while other brands fear being undercut.