VietNamNet Bridge - Local newspapers have quoted sources as reporting that UAZ, a large Russian automobile manufacturer, will begin assembling cars in Vietnam by early next year.

Vadim Shvetsov, UAZ’s CEO, stated that the negotiations on UAZ vehicle assembling are being carried out in an active way, which will wrap up by the end of the year, before the project implementation begins in early 2016.

Prior to that, Russian media quoted Alexei Likhachev, a high ranking official of the Russian government, as saying that Russian automobile manufacturers may set up factories in Vietnam and take full advantage of the Trans Pacific Partnership Agreement (TPP), of which Vietnam is a member, to penetrate the US market.

Nguyen Van Nam, former head of the Trade Research Institute, noted that UAZ vehicles have many outstanding features, including high quality, strong brand,and strong engine which allows to climb slopes and roll on tough roads. However, the old design of UAZ vehicles is no longer favored, while Lada is less known in Vietnam.

Therefore, Nam thinks Russian UAZ and Lada will find it difficult to compete with Japanese and South Korean cars in Vietnam and European and US markets.

“Russian vehicles won’t be able to penetrate Vietnam or any other TPP markets with the old designs. Russian might have thought of improving the designs to make products more favored in TPP markets, especially the US,” Nam said.

Also according to Nam, Vietnam will have to cut the tariff on the imports from ASEAN to zero percent by 2018. 

However, the imports from the area will be mostly cars and passenger carrying vehicles. If Russians want to penetrate the Vietnamese market, they should bring special product lines. UAZ is one of them. 

“In Vietnamese thought, UAZ vehicles are very durable. However, UAZ still needs to show to Vietnamese how UAZ can be used,” Nam said.

Le Van Tach, a renowned automobile expert, noted that UAZ can enjoy great advantages in entering the Vietnamese market. However, UAZ and other Russian brands have to compete with very strong rivals from the US, Japan and Europe.

Though warning that Russia will meet with difficulties in Vietnam, Nam still hopes they would succeed here.

“The former Soviet Union helped Vietnam build a series of mechanical engineering factories in the past. I hope when Russians come back to Vietnam, they would restart the factories and turn them into satellite companies to provide car parts to Russian automobile manufacturers,” he said.

Dat Viet