Local content of Vietnamese cars slow to grow

13:00 | 24/02/2022 Industry

(VEN) - A car is made with about 30,000 components, but up to 80 percent of the components used in Vietnam’s car assembly plants are imported and the remaining domestically produced ones are mainly cumbersome, simple devices.

Limited supply chain participation

According to the Ministry of Industry and Trade, there are about 300 automobile support industry enterprises in Vietnam, of which 80 percent are foreign invested companies and the remaining 20 percent include some leading domestic businesses and small and weak enterprises.

local content of vietnamese cars slow to grow
The domestic automobile support industry remains weak

Thailand has almost 700 level-1 and about 1,700 level-2&3 auto component suppliers, while Vietnam has fewer than 100 and 150, respectively. According to an assessment by Nguyen Trung Hieu from Toyota Vietnam’s corporate strategic planning division, the Vietnamese auto industry’s production output and scale are only one-third to one-fourth of Thailand’s and Indonesia’s. There are 46 component suppliers for Toyota in Vietnam, only six of which are purely Vietnamese companies. Two more Vietnamese enterprises will soon become Toyota suppliers but it will take them years to meet global standards, Hieu said.

Connection

It takes a Vietnamese enterprise three months to pass a training course and achieve the most basic certification. Referring to this, Truong Thi Chi Binh, Deputy President of the Vietnam Association for Supporting Industries explained that Vietnamese enterprises have small capital and capacity, while Vietnam's auto market remains too small in size. This problem is still waiting for a solution from the big auto companies as well as state policies, Binh said.

Nguyen Minh Son, General Director of the Hyundai Thanh Cong Automobile Manufacturing Company recommended that domestic support industry enterprises cooperate with producers of components for manufacturers around the world, convincing them to jointly invest or buy their technology in order to increase the product’s local content. This is important to minimize investment costs and improve business efficiency.

Businesses are willing to share and cooperate with supply companies that meet the common requirements of their parent companies, Son added.

A representative of Toyota Vietnam said increasing the number of suppliers and research, management and environmental capacity is crucial for Vietnam to take the initiative in component supply, and cooperation of agencies, industries and automobile companies is vital. Toyota, for example, has established a team to support suppliers, Hieu said.

Lan Anh