31st Sea Games - Vietnam 2021 Covid-19 Pandemic
Home / Economy / Industry
Localization rate in Vietnam’s car industry remains low compared to regional peers
Ngoc Thuy - Ha Thanh 12:36, 2020/05/09
The main issues of the local automobile industry lie in the inability to master core technologies such as engine production, the control and transmission systems.

The localization rate for passenger cars of up to nine seats in Vietnam remains much lower compared to the target and of countries in the region, according to the Ministry of Industry and Trade (MoIT).

 Illustrative photo. 

To date, Vietnam’s automobile industry is only involved in the low segment of the value chain, leading to its highly dependence on production assignments of the world’s major car manufacturers, said the MoIT in a report sent to the National Assembly on the current situation of the domestic automobile manufacturing and assembly industry.

Vietnam has so far launched a number of large-scale car automobile assembly projects to meet both domestic and regional demands. Once completed, these projects would help enhance the competitiveness of domestically-assembled cars against those imported in the short- and mid terms.

However, these advantages have gradually diminished, given a growing number of imported cars which increased 70% year-on-year in 2019.

According to the MoIT, the main issues of the local automobile industry lie in the inability to master core technologies such as engine production, the control and transmission systems, while localized parts are mostly of low technology, including tires, mirrors, car frame, plastic products, car seats, among others.

Moreover, high production costs are making prices of domestic cars 10 – 20% more expensive than those imported from ASEAN nations, especially as the automobile import tariff was removed since the ASEAN Trade in Goods Agreement (ATIGA) took effect in early 2018.

“Small-scale of production and under-developed supporting industries are two factors leading to a high production cost domestically,” stated the MoIT.

The MoIT also pointed out that Vietnam’s automobile industry only got its proper start in the 2000s, 20 or 30 years after Thailand or Indonesia. This is also one of the reasons attributable to the lack of an ecosystem to support the automobile industry in Vietnam.

In order to boost the development of the automobile industry and localization rate, the MoIT suggested the government should speed up the administrative procedures towards a reduction in excise tax for locally-made auto parts.

The MoIT said the move would help domestic cars become more price-competitive compared to imported ones, and at the same time encourage local producers to boost the localization rate, and eventually the support industries for automobile.

TAG: Vietnam localization rate automobile industry ASEAN Thailand Indonesia passenger cars imported cars assembling
Other news
14:35, 2022/35/29
Leading Norwegian firms join Green Exhibition in Vietnam
Most of the Norwegian companies presenting in the international exhibition have been active in Vietnam, while others are exploring investment opportunities in the Southeast Asian country.
18:10, 2022/10/24
HanoiTex 2022 provides development platform for textile industry
Vietnam’s textile sector is on track to realize its export growth target of US$43 billion this year and maintain strong momentum in 2023.
16:05, 2022/05/23
[Infographic] Hanoi’s tourism industry in 11 months
The city welcomed over 17 million visitors during January-November.
10:11, 2022/11/20
Australia funds electric vehicle infrastructure in Vietnam
The funding will help support the manufacturing of electric buses and help establish Vietnam’s first national electric vehicle charging network.
17:19, 2022/19/18
Hanoi tightens control over food safety at wet markets
Rapid food testing points will enable consumers to choose safe food amid loose management at wet markets.
17:50, 2022/50/17
Hanoi’s supporting industry enterprises attend VIMEXPO 2022
The expo, the only international exhibition on manufacturing and supporting industries in Vietnam, is underway at Hanoi International Exhibition Center – I.C.E Hanoi between November 16 and 18.