Dreaming big, investors pour trillions of dong into automobile factories

The Vietnamese automobile market is full of potential with predicted sales of up to 1.8 million products a year, but it still remains risky to invest in the industry.

Big investment

Thanh Cong Group and Hyundai Motor organized a groundbreaking ceremony to kick off the construction of a new factory in Ninh Binh.

Dreaming big, investors pour trillions of dong into automobile factories

The factory, capitalized at VND3.2 trillion, covers an area of 50 hectares in Gian Khau IZ and has designed capacity of 100,000 products a year. It will use modern technologies and put out models meeting Euro 5 and Euro 6 emission standards.

Thanh Cong has also started a project on an automobile supporting industry complex in Quang Ninh. Its CEO Le Ngoc Duc said the complex will gather many enterprises that make automobile parts, especially high-tech content for domestic automobile production and export.

Ford Vietnam has completed the upgrading and expansion of its factory in Hai Duong which has the capacity of 40,000 products a year, with investment capital of VND1.9 trillion.

In late 2019, Thaco made an investment to raise the capacity of Kia manufacturing factory from 20,000 to 50,000 cars a year. Prior to that, in early 2018, Thaco opened the Mazda manufacturing factory (50,000 products a year in the first phase).

In Chu Lai Open EZ in Quang Nam, Truong Hai has 12 car part manufacturing factories, with products for domestic consumption and export.

In mid-2019, VIngroup completed the first phase of VinFast automobile factory in Hai Phong, which can put out 250,000 products a year.

Analysts say that enterprises have been making big investments in automobile projects because they see the market has great potential.

 

The Ministry of Industry and Trade (MOIT) predicted that 750,000-800,000 products could be sold a year by 2025 and the figure would be 1.7-1.85 million by 2035.

Risks

Though the market has high potential, because of rapidly developing middle class, automobile manufacturers are facing big challenges.

More and more imports are arriving in Vietnam thanks to the import tariff of zero percent and simpler procedures. Because of high production costs, domestically made products are less competitive than imports in price.

Toyota Vietnam has resumed the assembly of its Fortuner model in Vietnam, but sales are unsatisfactory. Meanwhile, VinFast said it has incurred the loss of millions of dong for every car sold, and reported a loss of VND6.6 trillion in H1.

The government has committed to promote the development of the automobile industry with new policies, and automobile manufacturers are still waiting.

In the latest news, the government has asked the Ministry of FInance (MOF) to amend the luxury tax policy and submit the draft policy to the National Assembly in October. 

Tran Thuy

Manufacturing automobiles is a costly game

Manufacturing automobiles is a costly game

Automobile manufacturers usually incur a loss for the first 5-10 years of operation, but some of them have had to give up the game because they could not afford the high costs.

Local automobile manufacturers look forward to big preferences

Local automobile manufacturers look forward to big preferences

What should automobile manufacturers do – import cars for domestic sale or assemble cars domestically? They prefer the second solution, though the first brings higher profit.

 
 

Other News

.
Gov’t support aids automobile industry
Gov’t support aids automobile industry
BUSINESSicon  14/10/2020 

The domestic automobile industry was forecast to thrive, given the Government’s supports in tax policies for imported automobile components coupled with the increasing income of citizens.

Vietnam Airlines reports huge losses
Vietnam Airlines reports huge losses
BUSINESSicon  14/10/2020 

Vietnam Airlines Group, listed as HVN on the HCM Stock Exchange, earned nearly VND24 trillion (US$1.04 billion) in total consolidated revenue in the first nine months of this year, marking an estimated loss of VND10.75 trillion, 

Vietnam to increase imports of coal and gas
Vietnam to increase imports of coal and gas
BUSINESSicon  14/10/2020 

The latest data from the ministry sent to the National Assembly shows that Viet Nam is transitioning from an energy exporter to a net importer.

Coastal developers prepare for good upcoming times
Coastal developers prepare for good upcoming times
BUSINESSicon  14/10/2020 

In anticipation for the world eventually opening back up for travellers, developers are exploring the high potential of Vietnam’s world-renowned coastal urban areas.

Tax relief should not be “One size fits all”
Tax relief should not be “One size fits all”
BUSINESSicon  14/10/2020 

The Private Economic Development Research Board, under the Advisory Council for Administrative Procedure Reform, has proposed a 30% reduction in corporate income tax for all businesses this year.

Big investors pour money into IZ projects as land fund declines
Big investors pour money into IZ projects as land fund declines
BUSINESSicon  15/10/2020 

The land rent in some industrial zones in Hai Phong, Bac Ninh and Hai Duong has increased by 20-30 percent.

Vietnam urged to develop night-time economy
Vietnam urged to develop night-time economy
BUSINESSicon  14/10/2020 

Vietnam has missed some economic development opportunities and should not ignore the chance to grow the night-time economy, according to economist Tran Dinh Thien.

Tra fish swimming back to local market
Tra fish swimming back to local market
BUSINESSicon  14/10/2020 

Turning away from the uphill battle in exports due to COVID-19, tra fish producers have set an eye on the domestic market.

Investors find VN ports, logistics attractive
Investors find VN ports, logistics attractive
BUSINESSicon  13/10/2020 

With its annual growth of 12-14 per cent, the logistics sector, especially seaports, is becoming attractive to both domestic and foreign investors,...

Vietnam continues reform as part of EVFTA deal
Vietnam continues reform as part of EVFTA deal
BUSINESSicon  13/10/2020 

Viet Nam is continuing its institutional reform commitments made in the historic EVFTA in an aim to boost exports of agricultural products and...

VN to set new regulations for overseas investment
VN to set new regulations for overseas investment
BUSINESSicon  13/10/2020 

Individuals will no longer be allowed to invest in real estate abroad if a new draft decree issued by the Ministry of Planning and Investment is approved.

Tax cut welcome but not enough: businesses
Tax cut welcome but not enough: businesses
BUSINESSicon  13/10/2020 

The Government's 30% corporate income tax cut was a step in the right direction but it could have been more inclusive by offering support to small businesses that were in desperate need of cash due to the difficulties caused by the COVID-19 pandemic.

Vietnam expects to welcome more investors next year
Vietnam expects to welcome more investors next year
BUSINESSicon  13/10/2020 

Vietnam is still regarded by investors as an attractive destination thanks to its stable politics and macro economy, favourable geographical location, and advantages in land and human resources.

Long Thanh Airport project awaits disbursement of funds
Long Thanh Airport project awaits disbursement of funds
FEATUREicon  13/10/2020 

The government’s report to the National Assembly on the implementation of the Long Thanh International Airport project on October 9 shows that little has been done over the last five years.

HCM City tightens licensing of condotels, resort villas
HCM City tightens licensing of condotels, resort villas
BUSINESSicon  14/10/2020 

Local authorities have been asked to carefully consider the granting of new licenses to projects with condotels, following many problems that have been discovered.

Vietnam invests $12 billion abroad, telcos earn biggest profits
Vietnam invests $12 billion abroad, telcos earn biggest profits
BUSINESSicon  14/10/2020 

The total outward investment capital registered so far has reached $12.2 billion. The national oil and gas group PetroVietnam, the mililtary telco Viettel, and the Vietnam Rubber Group (VRG) are the biggest outward investors.

Experts unhappy with cement exports, but industry says unavoidable
Experts unhappy with cement exports, but industry says unavoidable
BUSINESSicon  12/10/2020 

In the first eight months of the year, cement companies exported more than 23.5 million tonnes of cement and clinker, an increase of 13.7 per cent year-on-year.

Half of local businesses use IFRS
Half of local businesses use IFRS
BUSINESSicon  12/10/2020 

More than half of companies in Vietnam have been adopting international financial reporting standards to meet investors’ expectations and improve their corporate governance, a survey showed.

Party Resolution boosts marine economy and defence
Party Resolution boosts marine economy and defence
BUSINESSicon  12/10/2020 

The sustainable development of the marine economy in association with the consolidation of defence and security is among the important sections of a resolution from the Communist Party of Vietnam

Japanese enterprises want to expand supply chains in Vietnam
Japanese enterprises want to expand supply chains in Vietnam
BUSINESSicon  12/10/2020 

About 15 out of 30 Japanese firms with overseas production bases say they want to expand and diversify their supply sources in Vietnam, according to a survey by the Japan External Trade Organization (JETRO).

 
 
 
Leave your comment on an article

OR QUICK LOGIN