This included 208,822 domestically assembled cars, up by 41 percent, and 160,512 imported units, up 46 percent.

If counting sales of TC Motor (72,037 cars) and VinFast (20,000), and sales of other brands, such as Audi, Jaguar, Land Rover, Mercedes Benz, Subaru, Volkswagen and Volvo (which don’t reveal their sales), the figure would be about 500,000 products. This means that over 500,000 cars were sold in 2022.

The General Department of Customs (GDC) reported that in January-November 2022, Vietnam imported 151,590 CBUs, 4.7 percent up year-on-year. Indonesia was the biggest automobile exporter to Vietnam (63,987 cars, $934.4 million), followed by Thailand (61,101 cars, $1.2 billion).

In recent years, some foreign-invested automobile manufacturers have CBU (complete built unit) sales much higher than domestically-assembled sales. For Mitsubishi Vietnam, for example, from 2019, CBU imports accounted for 80 percent of total sales, with 25,000 cars sold every year. For Suzuki Vietnam, 70 percent of cars sold since 2019 were imports.

Vietnamese automobile manufacturers have increased investment in the automobile industry. Thanh Cong Group has inaugurated its automobile plant No2 in Ninh Binh, with designed capacity of 100,000 cars a year, raising the firm’s total capacity to 180,000 cars/year. Thanh Cong has largely invested in an automobile supporting industry complex in Quang Ninh.

Truong Hai has two plants that make Mazda and Kia cars in Quang Nam Province, with a yearly capacity of 100,000 cars. It has poured $550 million into a plant manufacturing mechanical engineering products, including car parts. 

Large automobile complexes are taking shape in Quang Nam, Hai Phong and Ninh Binh.

Vietnamese cars at disadvantage

Truong Hai’s chairman Tran Ba Duong said that manufacturing of cars in Vietnam is not competitive in price because Vietnam has to import car parts. 

Only some car parts can be made domestically and the output is too small to have a good price. The production cost in Vietnam is 20% higher than in neighboring countries while CBU imports from ASEAN pose risks to investors in the automobile industry.

The Thanh Cong group has to offset expenses for production partners and car part suppliers to be sure that their investment won’t be affected in the context of low output. If CBU imports flow to Vietnam in large quantities, domestic output may decrease.

A representative of the Export Mechanical Tools JSC said that though it is a vendor of Toyota Vietnam, it is difficult to expand market share and increase output because many enterprises tend to increase imports for domestic sale.

The Ministry of Industry and Trade (MOIT) predicted that the Vietnamese automobile market would have a scale of 700,000-800,000 cars by 2025 and 1 million by 2030. When it reaches 500,000 and higher, this would be ‘big’, and when it reaches 1 million, it would be ‘very big’. This is an opportunity for Vietnam's automobile industry to develop.

The ministry said it would encourage large enough projects to create a market for supporting industries, and form up some concentrated automobile complexes, step up cooperation among automobile manufacturers, enterprises in supporting industries to upgrade investment efficiency.

CBU imports from ASEAN now can enjoy preferential tariff of 0 percent, while imports from the EU, UK and Japan would also bear the 0 percent tariff after 7-8 years.

Manufacturers may think that it would be easier to import CBUs to distribute instead of making products in Vietnam. Therefore, to encourage automakers to manufacture cars in Vietnam, there should be the preferences which are attractive enough to pave the way for the automobile industry to develop.

Tran Thuy