Hanoi (VNA) – The Vietnam Automobile Industry Development Strategy until 2035, approved by the Prime Minister on July 16, 2014, states that this automobile industry is an important driving force for the country’s industrialization and modernization, with a stable and consistent long-term development strategy. identified as needing to be facilitated by policy.
Based on this strategy, the industry will develop based on the potential of companies from all economic sectors and gradually meet domestic demand and defense and security requirements.
By 2035, it is expected to meet domestic demand while meeting environmental standards, enter the global automobile production chain, and earn significant export revenue.
A domestic car is not a dream either.
Thanks to a clear development strategy, Vietnamese car producers and assemblers initially gained a foothold in the domestic market and have achieved strong development in both quantity and quality.
The Ministry of Industry and Trade (MoIT) said that although Vietnam’s automobile industry was formed in 1991, it has only really made rapid progress in the last three years.
The number of vehicles produced or assembled domestically increased significantly from 287,586 in 2018 to 339,151 in 2019 and 323,892 in 2020. According to the Vietnam Registration Department, the figure increased by 14.9% from 2021 to 439,600 units in 2022.
Vietnam’s industry currently has more than 40 companies manufacturing and assembling cars, trucks, buses, special vehicles and semi-finished vehicles. Some companies, like THACO, are actively working on global production chains. Meanwhile, most of the world’s major car manufacturers are based in the country, including Toyota, Honda, and Ford. This has also attracted some foreign satellite manufacturers and component suppliers to Vietnam.
Additionally, due to improvements in the supply capacity of supporting industry companies, the domestic production rate of some auto parts has become relatively high. This ratio is quite high for trucks up to 10 tons (55%), meeting about 70% of the domestic market demand, but for passenger cars and special purpose vehicles with more than 10 seats, this ratio is between 20 and 50%. Yes, and meets the demand for approximately 90. % of demand.
As of the end of 2022, the number of Vietnamese parts suppliers that qualify as Tier 1 vendors for major automakers will exceed 400, a jump of more than 200% from 2016, and vehicle production will jump from 120,000 to 500,000 units. It is expected that the number will exceed 1 million units by 2020. 2025. This shows the attractiveness of this country’s automobile market.
Policies to promote the automobile industry
Apart from long-term development strategies, the government has also announced several policies to promote industry. This includes waiving registration fees for battery electric vehicles from 2022 to 2025, halving registration fees for domestically produced or complete vehicles from December 1, 2021 to May 31, 2022, and This includes abolishing regulations regarding the calculation of local production content starting from the 1st. , 2022.
Nguyen Chi Sanh, vice chairman and secretary general of Vietnam Machinery Industry Association (VAMI), said halving the registration fee for locally produced vehicles in 2021 and 2022 is a timely support policy. I commented.
“Thanks to this policy, the car market recorded good growth with 500,000 units sold, helping to contain the decline in car sales amid the global pandemic and economic crisis,” he said. said.
VAMI pointed out that the expansion of existing projects and the registration of new investments in the industry are contributing to the increase in domestic production and assembly of automobiles, creating opportunities for domestic supporting industries to make strides in both quantity and quality. .
According to VAMI, if manufacturers increase the proportion of domestically produced parts to 40%, Vietnam will become one of the region’s leading automotive manufacturing hubs with around 1,000 parts suppliers involved in the automotive support industry.
opportunities and challenges
The Vietnamese market has recorded faster-than-expected growth over the past few years, despite complex developments in the global market, including slow expansion and a decline in consumer purchasing appetite due to the pandemic.
With average growth of 20-30% in the 9-passenger vehicle segment and below, as well as a per capita GDP of over $4,000 and a high average number of cars per 1,000 people, the country has great potential in the region. It is considered to be a major market. It reached about 50.
Due to economic growth, rapid urbanization, and a growing middle class, demand for automobiles is expected to soar between now and 2025, creating significant development potential for the automobile industry.
On the other hand, there is a strong trend towards vehicle electrification around the world, and if the government comes up with appropriate incentives and support policies, especially in the midst of investment shifts and restructuring of industrial value chains, electric vehicle production in Vietnam will be possible. It is said that there is a great chance of attracting investment. regional.
However, in order to seize this opportunity, Vietnam must face many challenges, including fierce competition from imported cars from within the region and other countries around the world, and global standards that require manufacturers to further improve their production and assembly capabilities. I need to get over it.