return icon

Will Vietnam export cars to the EU?

Thailand fears that automobile manufacturers will relocate their production bases to Vietnam to enjoy the preferential tariff when exporting cars to the EU.

However, Vietnam doesn’t have opportunities to export CBU cars to the market.

Under the EVFTA, the EU commits to open its automobile market for Vietnam. Cars which now bear the MFN tax rate of 10 percent will see the tariff cut to zero percent after seven years. This means that Vietnam will have advantages when exporting cars to the EU.



Thai commerce ministry's Trade Policy and Strategy Office (TPSO) has warned that Thailand’s automobile, computer, electronic component exports now face high risks after EVFTA was signed. TPSO’s general director Pimchanok Vonkorpon said many automobile manufacturers would relocate their production bases to Vietnam.

Under EVFTA, the cars from Vietnam, in order to enjoy the zero percent tariff, must have the value of materials sourced from Vietnam and EU at 55 percent or more.

 However, Nguyen Minh Dong, a respected automobile expert, believes that the relocation of production bases to Vietnam to make cars for export to the EU will have not much significance.

At presence, Thailand is exporting CBU cars to the EU, mostly models belonging to Eco Car, a program accelerated by the Thai Government since 2007 which aims to make small-size energy saving and environment friendly cars.

Under EVFTA, the cars from Vietnam, in order to enjoy the zero percent tariff, must have the value of materials sourced from Vietnam and EU at 55 percent or more.

Thailand and the EU don’t have free trade agreement, so Eco Car’s exports to the EU have to bear tax. The idea of setting up production bases in Vietnam to make Eco Car products for export to the EU proves to be unfeasible.

The problem is that Eco Car models may not have the Vietnam-sourced material level, because Vietnam’s supporting industries are weak and the localization ratio in Vietnam is just 10-15 percent.

In theory, there are two ways to increase the localization ratio to enjoy the preferential tariff. First, lure as many car part manufacturers as possible to Vietnam, which proves to be impossible within a short time.

Second, if car parts sourced from Vietnam are not enough, manufacturers can use imports from EU or the EU’s businesses which now make investment in Thailand or other countries for assembling.

However, the models of Eco Car program mostly belong to Japanese brands, and use materials and accessories from Japan and Thailand.

Analysts noted that most of the enterprises joining the Eco Car Program in Thailand are Japanese, including Toyota, Honda, Mitsubishi and Suzuki, which are all present in Vietnam as well. They will only relocate their production bases to Vietnam if they can see advantages. The underdevelopment of Vietnam’s supporting industries, however, is a big challenge. 

Tran Thuy

Vietnam’s automobile market to be flooded with zero-tariff ASEAN cars

Vietnam’s automobile market to be flooded with zero-tariff ASEAN cars

The car sales in Vietnam are forecast to reach 500,000 units per year in 2020 and 1 million per year by 2030, with a turnover of US$12 billion each year.  

Renowned automobile brands to join Vietnam Motor Show 2019

Renowned automobile brands to join Vietnam Motor Show 2019

The Vietnam Motor Show 2019 (VMS 2019) will be held at the Saigon Exhibition and Convention Centre from October 23-27.


Authority maintains tough stance on safety violations on Hanoi’s “railway café street”

The Vietnam Railway Authority has insisted that it will take a hard line on railway traffic safety violations along Hanoi’s popular "railway café street" sketching across the inner districts in its recent report to the Ministry of Transport.

Foreign hi-tech firms expand investment in Vietnamese market

Molex, the world’s leading supplier of connectors and interconnect components, has unveiled its ambitions to expand its existing manufacturing plant in the Vietnamese market by developing its plant in Hanoi.


Hai Phong lures more than 1.24 billion USD in first nine months

Vietnam rakes in US$16.05 billion from tourism in nine months

Vietnam earned some 394.2 trillion VND (16.05 billion USD) from tourism in the first nine months of this year, equivalent to 78% of the figure recorded in 2019 before the COVID-19 pandemic broke out.


Vietnam invests in 10 energy technologies

Vietnamese poetry collection published in Canada

A poetry collection from five female translators based in Hanoi, entitled Ngũ Sắc Ánh Sáng (5 Sights of Light), has been introduced to Canadian readers by Ukiyoto Publishing.

Multi-billion thermal power project needs more capital

The Ministry of Industry and Trade (MOIT) has asked for ministries' opinions on solutions to problems related to the balance sheet of the Vung Ang 1 thermal-power plant.

The best September photos on VietNamNet

Hot air balloons with the Vietnamese national flag of 1,800m2 on the banks of the Saigon River, Typhoon Noru making landfall in Quang Nam Province, the roofs of many houses being blown away...

BSR to expand Dung Quat Oil Refinery

The Ministry of Industry and Trade (MOIT) has asked Binh Son Refining and Petrochemical JSC (BSR) to clarify some issues related to its project on expanding Dung Quat Oil Refinery.

Dutch conductor to lead concert at Opera House

Conductor Leon Bosch from the Netherlands will lead a concert featuring masterpieces by European composers at the HCM City Opera House on Saturday, October 8.

‘578’ to represent Vietnam at Oscars

An action film starring Miss Universe Vietnam 2018, H'hen Niê, 578: Phát Đạn Của Kẻ Điên (578: Magnum), has been selected as Vietnamese representative at the 95th Oscars, 2023.

USD surges to VND24,000, US$1.7 billion withdrawn from circulation

The State Bank of Vietnam (SBV) withdrew nearly VND41 trillion ($1.7 billion) through open market operations as the US dollar rose to over VND24,000 on September 26-30, 2022.

HCM City to build a series of new traffic projects

HCM City is speeding up procedures to start the construction of key traffic works at gateways by the end of the year, according to HCM City's Department of Transport.

Burning garbage in Hanoi threatens residents' health, property

There have been consecutive fires caused by people's poor awareness, who were burning garbage and straw in residential areas, causing fires recently in Hanoi.

New cargo airline still waiting for license

After the Prime Minister agrees on the establishment of IPP Air Cargo, the Ministry of Transport (MOT) will implement procedures to grant a license to the air carrier, according to MOT Deputy Minister Le Dinh Tho.