Vietnam’s Auto Market Enters Prolonged Price War as Oversupply and Policy Shifts Shake Demand

Economic

Summary:

Vietnam’s car market is witnessing a broad wave of price reductions and promotional offers due to severe supply-demand imbalance and looming regulatory pressure on fossil-fueled vehicles in major cities...

Widespread Price Cuts Reflect Mounting Inventory Pressure

From the beginning of August 2025, Vietnam’s automotive sector has entered a steep discounting phase, with major brands such as Toyota, Ford, Hyundai, Honda, Subaru, Volkswagen, and BMW aggressively subsidizing registration fees and cutting prices on a broad scale. The dominant reason: supply continues to outpace demand by a wide margin.

Toyota is offering full registration fee waivers on the Veloz Cross and Avanza Premio, and partial support on models like the Vios, Yaris Cross, and Corolla Cross. Ford’s promotions are similar, with full fee waivers on Ranger Sport and Wildtrak and discounted fees on Raptor and XLS variants. Hyundai is bundling cash incentives with a 50% fee reduction on Tucson, Accent, Creta, and Stargazer. Honda, Subaru, and luxury brands like Mercedes and Audi have joined with their own deep discounts, particularly on VIN 2023–2024 inventory, with some vehicles seeing price cuts of up to 550 million VND.

Supply Far Outstrips Demand

According to the General Statistics Office, July 2025 saw a total of 57,193 new vehicles added to the market 38,800 from domestic assembly and 18,393 imported despite a slight monthly decline. In the first seven months of 2025, domestic production reached 263,000 vehicles (up 64.4% YoY), while imports totaled 121,210 units (up 32.4%). Combined with more than 100,000 leftover vehicles from 2024, the total supply has surged to approximately 484,000 units.

By contrast, total vehicle sales over the same period were estimated at just 320,000 units, leaving a surplus of more than 150,000 units. Though sales rose 19% YoY, the excess supply has led manufacturers and dealerships to adopt aggressive price-cutting strategies especially as the market enters the traditionally slow Ghost Month (7th lunar month), when consumer spending is subdued due to cultural factors.

Electric Vehicles Gain as Fossil Fuel Models Face Regulatory Headwinds

Compounding the pressure on conventional vehicle sales is a growing wave of government regulation targeting fossil-fueled cars. A July 2025 directive from Prime Minister Phạm Minh Chính calls for Hanoi to begin increasing vehicle-related fees registration, license plate issuance, and parking for gasoline and diesel-powered vehicles in urban cores. The goal is to establish low-emission zones beginning in 2026, eventually banning non-compliant vehicles in central districts and potentially refusing new registrations for internal combustion engine (ICE) cars within these zones.

This policy shift is expected to significantly influence consumer preferences. As Hanoi and Ho Chi Minh City account for the largest share of Vietnam’s car purchases, new restrictions on gasoline vehicles are likely to accelerate the shift toward electric vehicles (EVs) and hybrids. Automakers and dealerships may find themselves struggling to move traditional fuel-heavy models without slashing prices.

VinFast and Hyundai Defy the Trend

Despite the sluggish ICE market, EV maker VinFast continues to post strong sales. In July 2025 alone, VinFast sold 11,479 electric vehicles, pushing its year-to-date total to 79,048 units. Hyundai also remains competitive, with nearly 28,000 vehicles sold in the first seven months. These figures suggest that brands aligned with market trends particularly in electrification are better positioned to weather the downturn.

Industry insiders expect the price war to persist through the rest of 2025. The combination of regulatory pressure, oversupply, and seasonal demand weakness is forcing a structural rebalancing. ICE vehicles especially models with poor fuel efficiency are likely to see further price erosion.

While trade incentives and upcoming policy dialogues may offer some relief, the broader trend points to sustained price volatility and strategic recalibration across the automotive sector. Customers may benefit in the short term from aggressive promotions, but for manufacturers and dealers, profitability will remain under strain as the market adjusts to a new reality shaped by oversupply and electrification.

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Economic

Trade Shock Undermines Manufacturing Ambitions

India’s manufacturing sector is facing a severe external shock following President Donald Trump’s imposition of a 50% tariff on Indian exports to the United States. This decision, justified by the White House as a punitive response to India’s continued purchase of discounted Russian oil, disproportionately targets a country that has historically aligned with U.S. trade and geopolitical frameworks. While China remains Russia’s largest oil customer, India is the only major Asian economy subject to such sweeping secondary tariffs.

The immediate fallout has been particularly acute for the Farida Group, India’s largest footwear manufacturer and a key supplier to global brands like Cole Haan and Clarks. The company halted a $114 million expansion project and froze plans for a new 60-hectare export facility in Tamil Nadu. With over half of Farida’s 23,000 employees producing goods for the U.S. market, the company now faces a potential mass layoff crisis.

Chairman Rafeeque Ahmed stated bluntly that while a 25% tariff could be managed through price renegotiations, the 50% rate renders operations with U.S. clients financially untenable. “There’s nothing we can do at this level,” he noted, expressing concern over the broader humanitarian impact on long-standing skilled labor.

Export Strategy at a Crossroads

India’s “Make in India” program, launched in 2014 with the ambition of raising manufacturing’s share of GDP to 25%, is facing its most critical test. As of 2024, the sector contributed just 13%, slipping from 16% in 2015, according to World Bank data. Despite recent progress such as Apple’s expanding assembly operations and growing exports in pharmaceuticals and green tech the tariff shock threatens to unravel years of investment-driven momentum.

U.S. companies have been pivotal in India’s industrial ascent, drawn by the “China Plus One” strategy which aimed to diversify supply chains. Yet as Ajay Sahai, director of India’s export federation, warned, companies are now considering an “India Plus One” model, signaling potential exits from the Indian market.

The new tariffs spare smartphones and pharmaceuticals for now, but the remaining $87 billion in Indian exports to the U.S. are at high risk. Analysts estimate that if the tariffs persist, Indian exports to the U.S. could fall by as much as 60%, shaving nearly 1% off India’s GDP. Further escalation if the tariffs are extended to pharma and electronics could see an 80% decline.

Political Pressure and Strategic Tensions

For Prime Minister Modi, the tariffs create both an economic and political liability. Being hit harder than China on trade terms weakens India’s international positioning. The timing is particularly sensitive, as the country prepares for general elections next year.

In parallel, China has begun leveraging the situation. While restricting technology exports and rare earth materials to India earlier this year, Beijing is now softening its stance. Bilateral talks on reopening direct flights and restoring border trade are underway, and China recently relaxed restrictions on urea exports. These signals hint at a possible recalibration in India-China ties, fueled in part by shared resistance to U.S. trade pressure.

Struggles on the Factory Floor

Manufacturers across India are struggling to remain competitive. Sudhir Sekhri of Trend Setters Group reported that his company dependent on spring and summer orders for 65% of revenue has been forced to deeply discount goods to retain buyers. In Mumbai, Technocraft Group’s director Sharad Kumar Saraf said the firm is exploring cost cuts as one-third of its revenue comes from the U.S.

Phone lines are ringing non-stop. “I get 80 to 90 calls a day from exporters seeking solutions,” said Sahai. “Doing business under these conditions is nearly impossible.”

The high tariff burden adds significant uncertainty at a time when orders for the 2026 summer season are being finalized. Clients are stalling decisions or pivoting to alternative suppliers in Southeast Asia, where trade terms are more favorable.

Prospects for Resolution and Geopolitical Bargaining

Despite the disruption, both countries are still engaged in dialogue. Ongoing negotiations aim to establish a bilateral trade agreement by autumn that could lower tariffs. A breakthrough in the Trump-Putin talks on Ukraine, scheduled this week in Alaska, might also open a path for easing oil-related penalties, indirectly relieving pressure on India.

However, time is not on India’s side. The longer the uncertainty drags on, the more likely global firms are to realign supply chains. “India still has a relatively small share of many export markets. U.S. brands can move quickly,” warned P. Senthilkumar of Vector Consulting Group.

India now stands at a critical juncture. The Trump administration’s aggressive tariff policy, framed as a geopolitical countermeasure, is inflicting deep economic strain on a country that was previously seen as a rising manufacturing alternative to China. Unless resolved swiftly, the fallout may not only derail India’s “Make in India” strategy but also lead to structural job losses, suppressed investment, and weakened export resilience risks that could reverberate far beyond the current trade cycle.\

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IC Markets

Forex

Political

Economic

It was another big week for financial markets last week, which again ended with global markets higher despite a few twists and turns across the week, including conflicting inflation data prints out of the US.The much-anticipated summit between US President Trump and Russian President Putin concluded after markets closed on Friday; however, there appears to have been little achieved so far, and details seem to be few and far between on what was discussed and agreed, or disagreed, during the two-and-a-half-hour meeting.Ukrainian President Volodymyr Zelenskiy is now scheduled to meet with Trump in Washington on Monday, so expect more updates on the first trading day of the week.There is more action in the week ahead, with several key data updates due out across the days and some major central bank events scheduled, including an RBNZ rate decision and updates from the Fed’s Annual Jackson Hole Symposium.

Here is our usual day-by-day breakdown of the major risk events this week:

Monday – It is a quiet start to the week on the economic calendar; however, expect markets to remain lively as investors react to the weekend’s geopolitical updates across all three trading sessions.

Tuesday – There will be an initial focus on antipodean markets in the Asian session on Tuesday, with Kiwi PPI data due to be released before the focus moves across the Tasman for Australian Consumer Sentiment numbers. There is little on the calendar in the European session; however, the focus will be on Canadian markets once New York opens, with key CPI numbers due out early in the day. We also hear from the Fed’s Michelle Bowman later in the day.

Wednesday – The macroeconomic calendar heats up on Wednesday with key updates across all three sessions and a big central bank theme. The initial focus in Asian markets will be on China, with the PBOC’s latest Loan Prime Rate updates due early in the session, before attention drops further south for the Reserve Bank of New Zealand’s latest rate call and updates. The European session sees UK markets in focus, with key CPI numbers due out early in the day. There is little in the way of data due out in the New York session, with just the usual weekly US Crude Oil Inventory numbers scheduled. However, there is a big Fed focus, with FOMC members Waller and Bostic both scheduled to speak around the key FOMC Meeting Minutes release.

Thursday – It is Flash PMI data day on Thursday, with data due out across several jurisdictions, including Australia, France, Germany, the EU, the UK, and the US. The New York session also sees the release of the Weekly Unemployment Claims numbers and Philly Fed Manufacturing Index data before focus moves west for the start of the Fed’s Jackson Hole Symposium.

Friday – It is a quieter day on the calendar on Friday, with Retail Sales numbers out of the UK and Canada the only major data releases scheduled. However, traders are expecting to see plenty of volatility as we hear from various major central bankers at the Jackson Hole Symposium, including a scheduled speech from Fed Chair Jerome Powell.

Source: IC Markets

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Economic

China–U.S. Trade War

Policy Reversal Highlights U.S. Strategic Tension

In a notable shift from years of escalating tech restrictions, U.S. President Donald Trump recently approved the sale of Nvidia’s H20 chip to China a model custom-designed to comply with previous U.S. export controls. While the move marks a partial easing of trade tensions, China has responded with notable skepticism rather than celebration.

Beijing, long vocal about the damaging effects of U.S. chip sanctions, is now portraying the H20 as a potential security risk. The chip reportedly includes features such as tracking and remote control capabilities claims Nvidia strongly denies. Regulatory bodies in China have summoned the company for clarification and warned domestic firms against using the chip, further straining the trade dialogue.

The Chinese reaction reveals a broader strategic calculus. As tensions with Washington have intensified over the years, Beijing has accelerated efforts to localize its semiconductor supply chain. The lukewarm reception toward the H20 signals a shift from reliance to resilience, as Chinese stakeholders seek not just access but technological independence.

Domestic Chipmaking Gains Undermine U.S. Leverage

Despite its reservations, China still needs Nvidia’s technology. The H20, though weaker than Nvidia’s flagship H100 and Blackwell chips, remains competitive. Yet the real reason behind Beijing’s hesitance lies in its rising confidence. Experts note that China’s leading tech firms especially Huawei have developed AI chips that rival the H20 in computing power, though they still lag in memory bandwidth due to limits in High Bandwidth Memory (HBM) manufacturing.

China’s HBM leader, CXMT, is estimated to be three to four years behind global suppliers like SK Hynix, Samsung, and Micron. These bottlenecks affect AI training efficiency and remain a critical barrier to full self-reliance. But the trajectory is clear: the share of domestic AI chips is projected to jump from 17% in 2023 to 55% by 2027, drastically reducing the dominance of U.S. suppliers like Nvidia and AMD.

Trump’s decision to reauthorize the H20 has also sparked debate about the integrity of national security frameworks. The chip was initially banned in April, only to be reapproved months later as “obsolete.” Officials like Commerce Secretary Howard Lutnick now argue that selling slightly older U.S. chips helps maintain global dependence on American technology stacks a view echoed by Nvidia CEO Jensen Huang, who previously met with Trump to push for relaxed controls.

China Plays the Long Game in Chip Independence

While the H20 may offer short-term benefits for Chinese companies such as ByteDance, Alibaba, and Tencent, the nation’s tech policymakers are taking a longer view. Supply chain insecurity, limited HBM access, and production constraints have only intensified Beijing’s ambition to develop a full-stack domestic chip industry.

Huawei, for example, is expected to ship only 700,000 high-performance AI chips in 2025, far short of market demand. Nvidia, by contrast, could have sold up to 1.5 million H20 units, generating $23 billion in revenue had restrictions not interrupted shipment plans. However, China’s authorities are now encouraging firms to source locally, even at the expense of performance or availability.

More than hardware performance, Nvidia’s advantage lies in its ecosystem a mature software-hardware integration platform that Chinese chips have yet to match. This “moat” effect keeps Chinese AI developers anchored to Nvidia, but as advanced packaging and local software tools improve, the grip may loosen.

The muted reaction to Trump’s chip policy reversal reflects China’s growing confidence and strategic resolve. While the H20 could temporarily ease domestic shortages, Beijing sees little value in depending on what it views as discarded U.S. technology. Instead, years of export controls have galvanized a national effort to build an autonomous chip sector an effort that is gaining momentum.

Even Nvidia’s CEO acknowledges that Chinese tech is closing the gap. As he put it, “China is right behind us. We’re very, very close.” With national security, economic sovereignty, and tech competition converging, this is no longer just a trade issue it is a foundational battle over who controls the future of global computing.

Source: CNN

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Russia-Ukraine Conflict

Diplomatic Optics Mask Strategic Divergence

The highly publicized summit between U.S. President Donald Trump and Russian President Vladimir Putin on August 15, 2025, concluded without delivering what many had anticipated a formal ceasefire in the Ukraine conflict. Reframed by the White House days before as a "listening exercise," the event marked Putin's first visit to American soil in nearly a decade and generated headlines more for its symbolism than its substance.

According to Trump, the talks were “very productive,” yet analysts were skeptical from the outset. Tina Fordham, founder of Fordham Global Foresight, suggested Putin views Trump with limited seriousness, while Richard Portes of the London Business School noted that simply hosting the Russian leader in Alaska already served as a significant public relations win for the Kremlin.

What emerged from the summit was not a step toward an immediate cessation of hostilities, but rather an intention by Trump to pursue a more abstract “peace agreement.” While vague in scope, this pivot carries strategic implications: by prioritizing a political framework over a battlefield halt, the U.S. may be signaling willingness to accept territorial compromises that Kyiv finds unacceptable.

What “Peace” Means to Each Party

This semantic shift from "ceasefire" to "peace agreement" highlights the diverging endgames at play. For Ukraine, peace entails the full withdrawal of Russian troops and the restoration of territorial sovereignty. For Russia, peace may validate existing territorial gains through international recognition or a freezing of current frontlines. For Trump, peace could be politically framed as a diplomatic victory, especially if it creates momentum before the U.S. election cycle accelerates.

The ambiguity embedded in the term “peace” opens the door for conflicting interpretations. On Sunday, the White House revealed that Putin had tentatively agreed to a framework where Ukraine might receive “Article 5-like” security assurances from Western nations, referencing NATO’s mutual defense clause. While this could appeal to some in the West as a middle-ground solution, it risks cementing a de facto division of Ukraine’s territory unless Kyiv fully endorses the arrangement.

Market and Policy Implications Extend Beyond Ukraine

Geopolitical outcomes from these talks ripple beyond military lines. The shift in diplomatic tone regardless of concrete results has already influenced financial markets. Oil prices dipped slightly on Monday amid reduced expectations for further U.S. restrictions on Russian exports. Equities rose in Asia and the U.S., buoyed by improved risk sentiment and fading fears of supply shocks.

The evolving narrative may also impact upcoming U.S. Federal Reserve communications. With minutes from the August FOMC meeting and Chair Jerome Powell’s Jackson Hole speech due this week, policymakers will likely assess global stability alongside inflation and employment data. A reduced geopolitical risk premium could give the Fed more breathing room to adopt a balanced tone, especially as markets price in an 85% chance of a September rate cut.

The Trump-Putin summit did not deliver a ceasefire, but it did reveal a redefinition of diplomatic priorities. Trump’s pursuit of a “peace agreement” signals an attempt to broker a high-level geopolitical deal that may redefine regional security architecture but risks sidelining Ukraine’s own terms for peace. With conflicting national interests shaping each party’s interpretation of resolution, the path ahead remains uncertain. Meanwhile, markets are cautiously optimistic, interpreting the shift as a de-escalation of immediate tensions even as the foundational disagreements remain unresolved.

Source: CNBC

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Winkelmann

Stocks

Forex

Economic

A rainy Monday morning in the city just got brighter. The mood is upbeat, with Nifty futures pointing to a strong start following Prime Minister Narendra Modi’s plan to cut taxes on everyday goods, which could help soften the blow of potential US tariffs. Also, talks between Donald Trump and Vladimir Putin are giving investors a glimmer of hope for a Ukraine peace deal. Adding to the positive vibes, Chinese Foreign Minister Wang Yi begins a two-day visit to India, signaling a thaw in the frosty relations between the two neighbors.

Bulls eye a comeback

Equity bulls looking for a comeback now have plenty to cheer. Prime Minister Narendra Modi’s pledge to lower taxes on everyday goods and S&P Global Ratings’ upgrade of the country’s credit rating come at just the right time, with global jitters from President Trump’s tariffs still clouding sentiment. These catalysts could provide investors a reason to look beyond the trade noise and refocus on India’s strong growth and fiscal metrics. Closer to home, valuations are also offering comfort after the recent correction, softening the disappointment from a muted April-June earnings season.

Wait-and-watch continues

Not all catalysts are in place just yet. Market participants eyeing relief from US tariffs tied to India’s Russian oil imports will need to be patient. Hopes that President Donald Trump’s Alaska summit with his Russian counterpart would yield a Ukraine ceasefire — and potentially prompt the US to rollback its 25% additional tariff — have been dashed for now. Instead, Trump said that any new secondary tariffs on buyers of Russian oil, including China, will be looked into only in two to three weeks, as he tossed the ball back to Ukrainian President Volodymyr Zelenskiy to strike a deal with Russia.

Stock winners from India-China bonhomie

While US trade overhang lingers, investors are finding opportunity in warming ties between India and China, a relationship that has been frozen since the violent 2020 border clashes. Companies with direct exposure to China are emerging as winners. InterGlobe Aviation Ltd. jumped over 4% last week on reports that direct flights may resume as early as next month. Minda Corp., which has a Chinese partner, and electronic-component manufacturer Kaynes Technology India Ltd., which imports key parts from China, are also being highlighted by analysts.

Even as the flow of bad news abates, market internals point to lingering caution. The value of equity cash-market trading on Indian bourses has fallen below $12 billion based on a 30-day moving average, data compiled by Bloomberg show. The level was previously touched in April and is well off the $16 billion in October. While block trades and institutional flows remain robust, retail investors are still wary of volatility and are dialing back day-to-day trading.

Source: Bloomberg Europe

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Economic

Stocks

Risk-On Sentiment Drives Record Equity Gains in Asia

Investor sentiment turned decisively upbeat in early Monday trading across Asia, pushing benchmark indices in Japan and Taiwan to fresh all-time highs. The broader Chinese blue-chip index also climbed to its strongest level in ten months, driven by a combination of stabilizing macroeconomic expectations and fading geopolitical risks. The MSCI Asia-Pacific index outside Japan, although slightly lower, remained near its four-year peak from the prior week.

The rally in Asian equities reflects a global risk-on mood, buoyed by speculation that borrowing costs will ease in the near term. Japan’s Nikkei gained 0.9%, further extending its bullish momentum, while Chinese blue chips rose 1.0%, bringing quarterly gains to nearly 8%. European markets also opened higher, with futures on the EUROSTOXX 50, FTSE, and DAX rising between 0.1% and 0.2%.

Oil Retreats on Diplomatic Momentum Between U.S. and Russia

Crude oil prices slipped slightly as the perceived threat to Russian oil exports diminished. Following a meeting on Friday between U.S. President Donald Trump and Russian President Vladimir Putin, markets interpreted the shift in rhetoric as a sign of de-escalation rather than imminent sanctions. Brent crude dipped 0.2% to $65.74 a barrel, while U.S. WTI eased 0.1% to $62.76.

The change in tone suggests Washington may refrain from pressuring major Russian oil buyers such as China and India with secondary sanctions in the short term. This reduced probability of export disruption has helped remove part of the geopolitical risk premium embedded in oil prices.

Fed Outlook Anchors Market Expectations Ahead of Jackson Hole

Traders are positioning ahead of the Kansas City Federal Reserve’s Jackson Hole symposium (August 21–23), where Fed Chair Jerome Powell is expected to clarify the central bank’s stance on inflation, employment, and future rate policy. Citi Research’s Andrew Hollenhorst anticipates Powell will acknowledge a balance of risks and set the stage for policy normalization, though he is unlikely to explicitly confirm a September cut.

Market pricing implies an 85% probability of a 25 basis point reduction at the Fed’s September 17 meeting, with an additional cut expected by year-end. The prospect of lower borrowing costs has played a major role in the recent rally in global equities.

In bond markets, short-term U.S. Treasury yields remain suppressed by rate cut expectations, while long-end yields are under pressure from concerns about stagflation and rising fiscal deficits, creating the steepest yield curve since 2021. Similarly, European yields are climbing due to increased defense spending projections, pushing German long-term yields to 14-year highs.

Solid Earnings and Consumer-Focused Reports Support Equities

The ongoing equity rally is underpinned by a robust earnings season in the U.S. The S&P 500 has delivered 11% year-on-year earnings growth, with 58% of companies raising forward guidance. Mega-cap tech stocks especially the so-called Magnificent 7 have outperformed consensus expectations, with a combined 26% annual EPS growth in Q2.

This week’s financial results from major consumer-focused retailers such as Home Depot, Target, Lowe’s, and Walmart are expected to provide further insight into the health of U.S. consumer spending, a key variable in maintaining economic momentum through the third quarter.

Currency and Commodity Snapshot

Currency markets reflected moderate movement. The dollar index steadied at 97.851 after last week’s 0.4% drop. The euro held at $1.1701, while the yen traded at 147.46 per dollar. Notably, the dollar continued to outperform the New Zealand dollar as the Reserve Bank of New Zealand is widely expected to cut rates to 3.0% this week.

Gold remained subdued at $3,343 an ounce, following a 1.9% decline last week, as markets awaited clearer signals from the Fed before committing further to safe-haven assets.

This week’s market narrative is dominated by converging optimism from three fronts: easing geopolitical tensions, improving earnings fundamentals, and strong expectations of looser monetary policy. The alignment of diplomatic progress in Ukraine, dovish signals from the Fed, and resilient economic data has fueled bullish equity sentiment across Asia and beyond. However, oil’s pullback and muted moves in commodities suggest investors are still cautious, awaiting concrete developments from upcoming U.S.-led diplomatic and monetary events.