Vietnam's auto industry ranks "last" in ASEAN

Vietnam's automobile industry is slow to develop.

Ms. Nguyen Thi Xuan Thuy, researcher, Institute for Strategy and Policy Research on Industry and Trade (Ministry of Industry and Trade), said that Thailand is the leading country in the region in terms of output with nearly 2 million vehicles, followed by Indonesia with more than 1.21 million vehicles and sales also reaching nearly 1.2 million vehicles; the Philippines, which is not highly regarded in this industry, also had sales of 425,673 vehicles while the output was only 141,252 units.

Meanwhile, Vietnam has a market size that has reached the threshold of sales of nearly 300,000 vehicles with a rapid growth rate of 24% in the past 5 years and an output of nearly 196,000 vehicles. Notably, in 2006, 2012 and 2017, the automobile market declined sharply due to the impact of domestic policy changes. At the same time, the elimination of import tax on completely built-up vehicles originating from ASEAN also makes the market more unpredictable.

In particular, while Vietnam has 20 automobile assembly enterprises with 84 enterprises providing level 1 components and accessories, Thailand has only 16 automobile assembly enterprises but has 690 enterprises providing level 1 components and accessories. While Vietnam has about 145 units providing level 2 and 3, Thailand has up to 1,700 of these suppliers. The supporting industry for the automobile industry in Vietnam has not been developed because the market size is still small, making the production cost of the automobile industry even higher. This is a vicious cycle for the automobile industry in Vietnam.

However, the potential of Vietnam's automobile industry is still quite bright when, in addition to the bright spots of infrastructure, population, and increasing per capita income, the market capacity is growing rapidly. The free trade agreements being implemented will contribute to increasing the import of complete vehicles and spare parts from partners, especially from ASEAN countries such as Thailand and Indonesia. At the same time, it creates the potential for exporting raw materials to partner countries, participating in the regional value chain.

The 4.0 industrial revolution will be a tool to improve the existing processes of the automotive industry, creating a comprehensive change in the way cars are produced, manufactured and value is created in the automotive industry such as electric cars, creating spare parts using 3D printing technology...