The domestic automobile parts industry has failed to reach the set target despite support from the Government. (Photo: VNA)Hanoi (VNS/VNA) -The domestic automobile parts industry has failed to reach the set targetdespite support from the Government, said Nguyen Thi Tue Anh, deputy directorof the Central Institute for Economic Management (CIEM).
Speaking at a seminar on policies, barriers and solutions to developing theindustry in Hanoi on October 30, Anh said the industry still had a lowlocalisation rate (or rate of local part supply).
She said Vietnam needed to promote the development of support industries tocompete with other countries in the region.
"It is important to have policy research related to the automotive andautomotive support industries to promote the use of domestic automobileparts," said Anh.
Vietnam has 358 automobile-related manufacturing enterprises, including 50 autoassembly businesses, 45 car chassis and body manufacturers and 214 auto partproducers.
The number of auto part producers is reportedly much lower than in Malaysia andThailand, which have 385 units and 2,500 units respectively.
The industry produces a number of simple parts such as components for chassis,trunks, cabinets, car doors, tires and tubes, radiators, brake lines,electrical wires and wheel rims. Vehicles with nine seats or fewer typicallyhave low localisation rates.
According to Luong Duc Toan, an official from the Ministry of Industry and Trade’sDepartment of Industry, firms only achieved high localisation rates in theproduction of trucks and buses of 10 seats or more. Locally manufacturedspecial-purpose vehicles had a local parts rate between 45 and 55 percent.
He said the parts were mainly produced and imported by enterprises funded byforeign direct investment (FDI). More than 90 percent of all part suppliers in Vietnamwere FDI firms.
Deputy General Director of Toyota Motor Vietnam (TMV) Shinjiro Kajikawa saidthe Vietnamese automobile market had not had stable regulations, leavinginvestors hesitant and keeping domestic production low.
TMV’s output in Vietnam is much lower than in other ASEAN countries, accordingto Kajikawa.
He said market fluctuations and low output kept the localisation rate low andlimited the network of parts suppliers. The cost of making automobiles in VietNam was 10-20 percent higher than production costs of imported cars from otherASEAN countries.
Toan said market capacity was limited by auto assemblers and many differentmodels, which makes it difficult for automakers and part producers to invest indeveloping production. Part suppliers also found it impossible to access theautomobile production chain in foreign countries.
Kajikawa said the auto industry could not develop without the growth of themarket, domestic assembly, manufacturing and support industries. The domesticsupport industry’s parts need to be more competitive in quality, cost anddelivery.
In 2017, Vietnam imported nearly 3.17 billion USD worth of parts for automobileproduction. Exports of components and spare parts reached 4.4 billion USD.
About 300,000 vehicles were sold, making up about different 150 models. Some ofthe best selling cars were from Toyota Motor Vietnam, Truong Hai AutoCorporation and Thanh Cong Hyundai Company.-VNS/VNA
VNA
