70th anniversary of Hanoi's Liberation Day Vietnam - Asia 2023 Smart City Summit Hanoi celebrates 15 years of administrative boundary adjustment 12th Vietnam-France decentrialized cooperation conference 31st Sea Games - Vietnam 2021 Covid-19 Pandemic
Home / Economy / Industry
Vietnam’s automotive supporting industries stay behind regional peers
Ngoc Thuy 16:20, 2019/11/29
Vietnam’s automotive industry is lagging around 30 years behind neighboring countries such as Thailand, Indonesia and Malaysia.

Vietnamese enterprises in the automotive supporting industries are lagging behind regional peers in terms of output and quality, according to Do Thang Hai, deputy minister of Industry and Trade.

 Overview of the conference. Source: VGP.

Hai made the statement at a conference discussing the opportunities for local companies participating in the global automotive value chain on November 28.

A report from the Industry Department under the Ministry of Industry and Trade (MoIT) stated the capacity of the local supporting industries has been improved over the past few years, leading to an increase in localization rate in certain types of transport vehicles that are assembled or produced domestically.

For example, light and medium trucks of up to seven tons are those with the highest localization rate at 55% and meet 70% of domestic demand, while passenger buses of more than 10 seats have a localization rate from 20% to 50%, meeting nearly 90% of the local demand.

Most of the world’s major automobile manufacturers are present in Vietnam, including Toyota, Honda, Ford, among others, leading to a number of satellite producers and auto parts suppliers investing in Vietnam.

Such a trend has led to an increase in number of enterprises operating in the automotive supporting industries in the country, the report asserted.

However, for passenger cars of under nine seats, the localization rate is 7 – 10%, much lower than the target of 60% set in 2010, and the average 65 – 70% of countries in ASEAN, and especially in the case of Thailand, it is nearly 80%. 

At the conference, Hai also addressed other shortcomings of the local automotive supporting industries, including the obsolete technologies and equipment, low product quality but at high prices, enterprises’ low capabilities to participate in the domestic automotive production chain.

According to Hai, as Vietnam’s automotive industry lags around 30 years behind neighboring countries such as Thailand, Indonesia and Malaysia and huge challenges remain for Vietnam to catch up with.

He stressed the prerequisite for Vietnam is a well-developed automotive assembling and manufacturing sector, which would open up market for companies in the supporting industries to become suppliers and join the automotive production chain.

Moreover, the automotive industry must continue to integrate in the regional and global value chain, while attracting investment in the sector to enhance competitiveness of local companies.

“There must be close cooperation among government agencies, the business community and related institutions. The MoIT will strive for further development of Vietnam’s supporting industries in the coming time,” said Hai.

The Industry Department suggested each province/city play a more active role in drafting their own policies for the supporting industries.

For the time being, the MoIT is expected to work with the banking sector to provide preferential loans for companies in the supporting industries until 2025.

TAG: Vietnam Thailand Malaysia automobile supporting industries MOIT Hyundai Ford ASEAN
Other news
08:00, 2024/02/27
Vietnam aims to export US$16 billion worth of timber this year
Exports of wood and wood products made a strong breakthrough in January, reaching $1.49 billion, a 72.5% increase over the same period in 2023.
07:26, 2024/02/27
Prime Minister Pham Minh Chinh expects more from Siemens’ local operations
The Government will facilitate Siemens with better conditions to expand its operations in Vietnam.
23:03, 2024/02/25
Hanoi to host new high-value IT parks
These technology parks in the three major cities will give priority to the development of IT services and products with a high added value.
21:16, 2024/02/24
Vietnam's labor market soars with 51.7 million employed in Q1
Vietnam's labor market is anticipated to exhibit positive signs of recovery in 2024, although it may not fully revert to pre-Covid-19 levels.
13:45, 2024/02/24
Hanoi envisions becoming leading semiconductor center
Hanoi has been designated as the country’s political brain and an important economic, cultural, and scientific center.
18:08, 2024/02/23
Vietnam to produce clean hydrogen by 2030
Such a move would help Vietnam realize the country's goal of achieving net-zero emissions by 2050.