Ambition drives Vietnam’s auto support industry

10:24 | 12/07/2019 Industry

(VEN) - Vietnam has big plans for its support industry for the automobile sector, which require promotion of manufacturing value chains, investment, joint ventures and linkages.

ambition drives vietnams auto support industry
Deputy Minister of Industry and Trade Do Thang Hai (third from the right) visits Vietnam AutoExpo 2019

Much room for development

At the opening ceremony of the 16th International Exhibition on Automobile, Transportation and Supporting Industry (Vietnam AutoExpo 2019) in Hanoi recently, Deputy Minister of Industry and Trade Do Thang Hai affirmed that the automobile industry in general and its support industry in particular still have much room to develop. Auto manufacturing and assembly businesses in Vietnam have built major factories such as Thaco Bus, Thaco-Mazda, Hyundai Thanh Cong and VinFast. In the first three months of 2019, 72,200 autos were manufactured/assembled in Vietnam, an increase of 22.3 percent compared with the first quarter of 2018.

According to Vingroup Deputy General Director Vo Quang Hue, VinFast inaugurated its automobile manufacturing complex on June 14 to begin mass production. This event not only showed VinFast’s strong determination to realize the dream of manufacturing Vietnamese-branded automobiles but also listed Vietnam among countries with auto manufacturing industries worldwide.

A representative of the Ministry of Industry and Trade’s Industry Agency said that the Vietnamese auto support industry had achieved significant results in recent years. Among the total number of 358 automobile-related manufacturers, 50 specialize in assembling; 45 manufacture chassis and perform bodywork; 214 manufacture components and spare parts. The local content of seven-tonne trucks is 55 percent, and that of buses with 24 or more seats is 45-55 percent. Some products have been exported to Laos, Cambodia, Myanmar and Central America.

Building a specific strategy

According to Deputy Minister Do Thang Hai, the Vietnamese Government wants to develop the automobile sector as a major industry to meet the maximum level the domestic demand. This sector is also expected to become a supplier of components, spare parts and valuable details for the global automobile manufacturing chain, contributing to the growth of the Vietnamese economy and the development of other industries. This is also the general objective of the plan to develop the Vietnamese automobile industry until 2020, with a vision towards 2030.

Under the plan, by 2020, the Vietnamese automobile support industry will be able to manufacture major components such as engines and gearboxes for trucks and buses. In the 2021-2025 period, it will join the global automobile manufacturing value chain. By 2035, it is expected to become a major supplier of components and spare parts in the region and worldwide, meeting more than 65 percent of the domestic demand.

To achieve these targets, in the opinion of Pham Tuan Anh, Deputy Director of the Industry Agency, Vietnam should create a suitable strategy to develop the support industry for the automobile sector and promote its manufacturing value chain. Appropriate policies should be put in place to attract business participation in each stage of the manufacturing chain. Joint ventures and linkages should be promoted to strengthen domestic suppliers.

The automobile industry has contributed billions of US dollars to Vietnam’s state budget annually and generated

hundreds of thousands of direct and indirect jobs.

Lan Anh