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Vietnam to tune up support industry to drive automobile growth

Low-tech and low-added value production is putting the brakes on the industry.

Ngày đăng: 27 tháng 3, 2021
Cập nhật: 30 tháng 7, 2022
Lượt xem: 120665113
Nguồn: vnexpress

Vietnam is targeting car manufacturing as a “spearhead industry” that could help it move up the global value chain.

Official data compiled by the Trade Ministry shows that Vietnam has more than 400 small-and medium-sized enterprises involved either in assembly or spare parts production, and nearly half of them are foreign-invested companies.

Experts forecast domestic carmakers will produce 50,000 units a year by 2035, spurred by soaring demand and strong government support.

The Vietnam Automobile Manufacturers Association said that last year, Vietnamese bought a record number of 244,914 cars, up 55% from 2014 sales.

Statistics show that Vietnam imported more than 125,000 units in 2015, an increase of 77% compared to 2014. For 9-seat cars and smaller vehicles, the number reached more than 31,000 units, a significant increase of 104 percent compared to the previous year. 

However, the fact that Vietnam still heavily relies on imported automobiles to meet the demand at home has put a tremendous burden on its local car industry, which is set to be faced with more challenges in the era of new-generation free trade agreements.

After the ASEAN Trade in Goods Agreement, Vietnam will gradually reduce automobile import tax within the next 4 years for cars imported from ASEAN countries.The current tax rate of 50% will be cut to zero in 2018.As a result, imports from neighboring ASEAN countries are expected to grow exponentially.

That means that Vietnam's car industry could be significantly affected when a series of free trade agreements come into effect, leaving domestic manufacturers subject to stiffer competition from foreign manufacturers. imported goods.

Pham Tuan Anh, Deputy Director of the Heavy Industry Department, Ministry of Industry and Trade, said that Vietnam's weak supporting industry is the main reason for the slow development of the auto industry.

The ministry said local companies can manufacture some simple parts, such as mirrors, glass, seats, wiring, batteries, pipes and plastic products, but very few companies invest. into the advanced technology used to manufacture automobile bodies.

Vietnam failed to reach a target set for 2010 that local support industries would meet up to 60 percent of automobile manufacturers' demands.For example, domestic suppliers can currently only fulfill 7-10% of orders for the production of 9-seat cars.

The government has a plan to shake up the support industries, including incentive policies for automobile suppliers, to remedy the situation.

According to the plan, Vietnam's supporting industries will be able to meet 55 to 80% of the demand of domestic auto brands by 2035, bringing the number of CBU cars to 50,000 units, equivalent to 50,000 units. 20% of market demand.

Related News:

Vietnam to shake up supporting industries to seize TPP opportunities

Automobile firms struggle with latest changes to Vietnam’s tax policy


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