The Concealed Expenses of Owning a New Chinese Vehicle | Carscoops

      Factors contributing to higher depreciation rates include the unfavorable reputation of Chinese automakers and significant discounts on new models.

      In Vietnam, Chinese vehicles do not retain their value as well as their Korean or Japanese counterparts.

      A recent study indicates that MG models depreciated by 24-33% within two years.

      In comparison, Toyota models only experienced a 10-12% loss in value during the same timeframe.

      Although Chinese automakers are primarily absent from the US market, they are swiftly establishing themselves in export markets, gaining attention with competitively priced models packed with technological features. Nonetheless, a recent study reveals that their appeal diminishes more rapidly than that of competitors from other countries.

      Conducted in Vietnam, the study shows that these emerging brands experience significantly higher depreciation, often facing greater financial losses than their more established rivals.

      The research focused on three popular models from the Chinese automaker MG, which is owned by SAIC, from 2022 to 2024: the MG 5 sedan, the ZS SUV, and the HS SUV. For context, MG re-entered the Vietnamese market in 2020 and is now the largest Chinese automaker in the region.

      The findings, reported by VN Express International, were revealing. The MG HS SUV experienced the largest drop, losing 33% of its value in just two years. The MG 5 sedan followed closely with a 27% depreciation, while the ZS SUV lost 24%. The data, obtained from the local sales platform OTO, also included comparisons with three non-Chinese models.

      To provide context, let’s see how competitors performed. The Kia K3 sedan from South Korea depreciated by 19%, while the Hyundai Creta SUV lost 17%. The Hyundai Tucson also saw a 17% decline in value between 2022 and 2024. Japanese models, such as those from Toyota, performed best in retaining their value, with depreciation rates between 10-12% over the same two-year period.

      Not all Chinese vehicles are suffering from steep depreciation, however. The Beijing X7 SUV from BAIC, another Chinese manufacturer, lost only 12% of its value in two years, which is actually better than some competitors. Analysts attribute this to a supply shortage of the model in Vietnam, along with its attractive tech features appealing to the used car market.

      Chinese automakers do not yet enjoy a strong reputation in Vietnam, but this is gradually changing as more buyers experience the new generation of vehicles and recognize enhancements in design, quality, and features. Still, the higher depreciation rates of Chinese cars are affected by aggressive pricing strategies, including significant discounts on new models aimed at attracting buyers.

      Currently, there are 13 Chinese brands offering vehicles in Vietnam, with seven of them entering the market just last year. In 2024, vehicle sales in Vietnam reached 494,310 units. There’s no specific data on the market share controlled by Chinese brands, but the transition is evident.