Two paths for Vietnam's automobile industry

There are two clear investment tendencies in the automobile industry. First, becoming the leading assembling center in Southeast Asia, and second, buying technologies and making automobiles for export.

Three Vietnamese companies

The Q1 2019 report of the Vietnam Automobile Manufacturing Association (VAMA) showed that while the sales of domestically assembled cars decreased by 8 percent, value of imports soared by 230 percent compared with the same period last year.

Two paths for Vietnam's automobile industry

In the last two years, Vietnam’s automobile industry has witnessed big changes because of the ASEAN Trade in Goods Agreement (ATIGA). The tariff cut from 30 percent to 0 percent applied to ASEAN-originated products has attracted investors, who enjoy benefits from ATIGA.

Vietnam is considered a potential market thanks to the modest ratio of 23 car owners per 1,000 people (the figures are 264 in Thailand and 400 in developed countries).

Vietnam is considered a potential market thanks to the modest ratio of 23 car owners per 1,000 people (the figures are 264 in Thailand and 400 in developed countries).

Vietnam’s income per capita is estimated to reach $3,000 by 2021, and the current low ratio of car owners and the possible policy on motorbike restriction are expected to lead to a car boom.

Thaco, Hyundai Thanh Cong and VinFast are the three best known Vietnamese automobile manufacturers.

VinFast has exported its first consignment of 160 cars to many markets to experiment with safety in different weather and road conditions.

VinFast, with its 3.5 manufacturing complex in Hai Phong, can churn out 250,000 cars, 3,000 buses and 250,000 electric motorbikes a year in the first stage.

Meanwhile, Thaco has opened a factory in Chu Lai IZ, making Peugeot cars after making Kia and Mazda products. With investment capital of VND4.5 trillion, the 7.5 hectare factory plans to churn out 200,000 products a year. It is designed to fulfill the orders of different kinds for export.

As for Hyundai Thanh Cong, after a period of importing and distributing Hyundai products, the company last year decided to set up a factory to assemble Hyundai cars in Vietnam after signing an agreement to become the strategic partner of Hyundai Motor.

 

Manufacturing or assembling?

Thaco and Hyundai are following the path to become foreign manufacturers’ partners which assemble cars of famous foreign brands.

Meanwhile, VinFast has decided to manufacture cars with its own brand with imported foreign technologies.

Tran Hong Ninh, CEO of BVOT, which has been operating for seven years in the automobile industry in Vietnam, commented that it is still two early to say which path is better.

VinFast can make cars with its own brand, but in order to do this, it will need huge investment capital.

Thaco and Hyundai Thanh Cong cannot develop their own brands, but can set up automobile production centers in Southeast Asia and Vietnam and make products for export.

GDC reported that in Q1, Vietnam imported $883 million worth of cars.

Thai manufactured 3 million cars in 20 years, Vietnam assembled 250,000

Thai manufactured 3 million cars in 20 years, Vietnam assembled 250,000

Twenty years ago, five large automobile manufacturers asked Vietnam to open the automobile market. But the proposal was refused.

First made-in-Vietnam Vinfast car to be delivered in mid-June

First made-in-Vietnam Vinfast car to be delivered in mid-June

Vietnamese automaker Vinfast has announced that the first edition of made-in-Vietnam automobile Fadil will be handed over to clients in the largest-ever ceremony in mid-June.

Tran Thuy

 
 

Other News

.
Promising figures offering confidence for pharma future
Promising figures offering confidence for pharma future
FEATUREicon  15/01/2021 

Vietnamese pharmaceutical giants rushed to new business lines in 2020 to create new motivation for growth amid the ongoing pandemic complications, with some changes bringing about better results.

Phu Quoc island city draws $16.5 billion in investment
Phu Quoc island city draws $16.5 billion in investment
BUSINESSicon  15/01/2021 

Phu Quoc, Vietnam’s first island city, has attracted 372 projects to date with capital totalling some $16.5 billion.

Experts warn about risky investments in gold and stocks
Experts warn about risky investments in gold and stocks
FEATUREicon  15/01/2021 

With increasingly rapid developments occurring in the gold and stock markets, economic experts believe these represent risky investment channels, with investors needing to carefully consider all of their financial decisions.

Tax evasion questions raised as 55% of FDI enterprises report losses
Tax evasion questions raised as 55% of FDI enterprises report losses
BUSINESSicon  15/01/2021 

Numerous FDI enterprises have reported losses over the course of several years, despite continuing to expand production and business activities, along with an annual increase in revenue, thereby causing losses and damage to the state budget.

Footwear industry needs to resolve difficulties to make breakthrough
Footwear industry needs to resolve difficulties to make breakthrough
BUSINESSicon  15/01/2021 

The Covid-19 pandemic has continued to obstruct trade activities of the leather and footwear industry in the main export markets of Vietnam, including Europe and the US.

Vietnam exports 1.37 billion medical masks in 2020
Vietnam exports 1.37 billion medical masks in 2020
BUSINESSicon  14/01/2021 

Domestic firms shipped over 1.37 billion medical face masks of various types abroad throughout 2020, according to statics compiled by the General Department of Vietnam Customs.

Vietnam's GDP to grow by 8 per cent: Oxford Economics
Vietnam's GDP to grow by 8 per cent: Oxford Economics
BUSINESSicon  14/01/2021 

Southeast Asia’s economic growth will rebound to 6.2 per cent in 2021 with Vietnam achieving 8 per cent growth, according to the latest economic outlook report from Oxford Economics commissioned by chartered accountancy body ICAEW.

Covid-19 forces travel firms to undergo restructuring
Covid-19 forces travel firms to undergo restructuring
FEATUREicon  14/01/2021 

For travel firms to survive the pandemic, they have had to undergo restructuring.

Manufacturing hub dreams manifesting with big moves
Manufacturing hub dreams manifesting with big moves
BUSINESSicon  13/01/2021 

Vietnam is pushing ahead in its mission to become the ideal manufacturing hub for overseas investors by taking advantage of a largely pandemic-free landscape and building on 2020’s successes.

Vietnam takes advantage of FTAs to enjoy trade surplus with markets globally
Vietnam takes advantage of FTAs to enjoy trade surplus with markets globally
BUSINESSicon  14/01/2021 

Last year’s export growth of 6.5% can be viewed as a bright spot in the nation’s economic picture, with this growth being attributed to the signing of a number of free trade agreements (FTAs).

New regulations to change Vietnam automobile industry in 2021
New regulations to change Vietnam automobile industry in 2021
BUSINESSicon  14/01/2021 

Cars in Vietnam since 2021 are subject to new regulations such as registration fee, import tariff, and higher emission standards.

Vietnam economy set to bounce back in 2021
Vietnam economy set to bounce back in 2021
BUSINESSicon  13/01/2021 

Vietnam is well-positioned to revive its economy this year due to a boost in private investment and exports, experts told a forum in HCM City on Monday.

Vietnam green-lights Anheuser-Busch InBev-SAB Beer merger
Vietnam green-lights Anheuser-Busch InBev-SAB Beer merger
BUSINESSicon  13/01/2021 

Anheuser-Busch InBev and SAB Beer announced their merger in Viet Nam on January 12 following the approval of the Ministry of Industry and Trade.

Coffee farmers suffer poor crop, low price
Coffee farmers suffer poor crop, low price
BUSINESSicon  13/01/2021 

Coffee farmers in the Central Highlands of Vietnam are entering the harvest season anxiously as the prices of coffee are still kept at a low level, whereas the production costs are increasing.

EU investors to pour $1 billion into logistics center in Phu My
EU investors to pour $1 billion into logistics center in Phu My
BUSINESSicon  13/01/2021 

Many big investors from the EU have expressed a willingness to invest $1 billion in a logistics center in Phu My.

Vietnam budget deficit forecast at 3.6% of GDP in 2021
Vietnam budget deficit forecast at 3.6% of GDP in 2021
FEATUREicon  12/01/2021 

Fitch Solutions holds a more optimistic view on Vietnam’s economic rebound in 2021, with its real GDP growth forecast at 8.6%, against the government’s 6.5% target.

VIETNAM BUSINESS NEWS JANUARY 14
VIETNAM BUSINESS NEWS JANUARY 14
BUSINESSicon  14/01/2021 

E-commerce anticipated to record stellar growth in 2021

Building materials market forecast to be robust in 2021
Building materials market forecast to be robust in 2021
BUSINESSicon  12/01/2021 

The building materials market is forecast to be robust this year, with the demand fuelled by the increase in infrastructure development investment and the recovery of the property market, according to the Ministry of Construction.

Vietnamese ports on pace to post banner year
Vietnamese ports on pace to post banner year
BUSINESSicon  12/01/2021 

Vietnam’s port sector will flourish this year as trade in goods is expected to thrive on the back of recovery in production, domestic consumption, and export markets, according to industry analysts.

Bright future tipped for Vietnam’s e-commerce market
Bright future tipped for Vietnam’s e-commerce market
BUSINESSicon  12/01/2021 

Vietnam’s e-commerce market is forecast to continue growing strongly in the time to come thanks to a big population with high rates of young people and internet users.

 
 
 
Leave your comment on an article

OR QUICK LOGIN