Vehicles defined in the strategy include trucks, cars with more than 10 seats, cars with up to nine seats, and specialised vans.

Small and multifunctional vans for agricultural use and serving customers in rural and mountainous areas will also be encouraged.

The support industry for the sector will use advanced technologies and enter partnerships with leading world manufacturers to be eligible to supply spare parts for global vehicles.

By 2020, the auto support industry is expected to be able to meet about 35% of the demand for domestic spare parts and accessories. It should also be able to satisfy more than 65% of local needs between 2026 and 2035.

The strategy also targets the export of about 90,000 made-in-Vietnam cars by 2035, encouraging the production of environmentally friendly vehicles.

The strategy underscores the need to boost linkages and co-operation among auto makers and assemblers, enterprises engaging in support industry, research and training centres in all economic sectors.

The PM's Decision 1168/QD-TTg dated July 16 approving the strategy will replace Decision 175/2002/QD-TTG on December 3, 2002.

However, Vietnam's automotive industry could face major difficulties under commitments to the ASEAN Free Trade Area (AFTA), which will abolish auto import taxes in 2018.

ASEAN + will waive taxes on car imports between ASEAN member countries, as well as Japan, the Republic of Korea and China, that are parties to the agreement.

The tax cut poses a direct threat to Vietnam's fledgling auto industry, which will be unable to compete with the price and quality of imports. This means the country has only five years to develop its auto industry to compete with an impending influx of imports after 2018.

While the target for local diesel production was set to reach 100,000 units by 2010, Truong Hai is the only company to invest in a factory making diesel engines. It began production in 2014.