Cars being assembled at a Ford factory in Hai Duong province. (Photo: VNA)Cars in Vietnam are not coming cheap as their prices are twice ashigh as those in Thailand and Indonesia, and even way higher than in developedcountries like Japan and the US.
Two major causes of the high prices are high taxes and low output,with the latter being in evidence as domestic manufacturers are operating farunder their capacity.
The ministry said the domestic automobile "industry"still had a long way to go before it could meet the criteria to be categorisedas an industry. It did mostly unsophisticated assembly work with productionlines centring around coating, welding, assembling, and testing.
The underdevelopment of its supporting industries is anothermatter of concern for the ministry as most component producers are small insize and have weak ties with one another. Some churn out components with higherror rates and substandard quality.
Annually, Vietnam imports between 80 to 90% of the automobileparts used in car-making, which run to 5 billion USD. Domestically-producedparts include tyres, seats, glass, wires, and some other plastic parts.
The ministry said the fragmentation of the market led to thesituation that every car producer only got a thin slice of the pie. With such atiny market portion, producers had insufficient resources to expand operationsand reach as far as foreign supply chains.
Under the ministry's estimation, the Vietnamese average income isnot high enough to give the industry the momentum it needs to take off. Theindustry needs a GDP per capita of at least 4,000 USD per year to turn thecorner.
Vietnam has over 40 automobile assemblers and manufacturers todate, which cater to 70% of the domestic under-nine-seat car market. Theirtotal capacity amounted to 755,000 vehicles per year in 2022.
It is worth noting that around 60% of buses in Vietnam have beendomestically manufactured. The figures for other vehicles are lower, with 40% fortrucks and 25% for cars.
Those figures indicate that the domestic vehicle-making industryhas met its production targets for buses and trucks, but not so for cars, whichstill fall far short of expectations.
The ministry said it would take measures to help domesticautomobile manufacturers and assemblers reach economies of scale, therebydriving down car prices in Vietnam.
The measures would include financial support to facilitatetechnology transfer and improve corporate governance. Preferential loans with arate of 3% would also be introduced to redouble the efforts.
The ministry also pledged legal support for the car-makers bydeveloping laws in favour of the industry, allowing them to get off the groundat home and abroad.
Truong Chi Binh, Vice President and General Secretary of theVietnam Association for Supporting Industries, shared this view.
He said car-makers need better access to credit, land, andconstruction approval in order to cut costs and have a deeper involvement inthe supply chains.
He called for favorable policies to improve their capability andfoster their ties, thereby laying the groundwork for the formation ofindustrial clusters./.
VNA
