Car industry: Firmly steps from internal resources

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The most modern Mazda car factory in Southeast Asia

The "wild" of Thanh Cong

On the last day of 2018, an hour was given to us to work by General Director of Thanh Cong Group (TC Motor) Le Ngoc Duc. Answering the reporter's question: "Is it foolish for Thanh Cong to go against the trend of gradually turning to CBU imports to enjoy the zero percent preferential tax of the joint ventures, even completely eliminating the beneficial import segment to switch to assembly production of 100 percent?", Duc said: "Enterprises carefully calculated themselves. Imports are temporary, production is a permanent development for them, especially with a market of nearly 100 million people, and the car ownership rate is still very low. But competitive production is not easy when imported cars have such tax advantages. Obviously, investment in production is risky and hard but the market has much potential. Besides, he said we are a domestic enterprise wanting to work for the country and join hands to contribute to the development of Vietnam's automobile manufacturing industry.”

The result of facing this challenge of TC Motor is that in 2019 consumption exceeds the expected figure of 70,000 vehicles, accounting for nearly 25 percent of the tourist car market, maintaining the digital position two of whole market (far exceeding the figure of nearly 56,000 cars of 2018)

Having a good foundation as a popular brand in the Vietnamese automotive market, but when moving to production, TC Motor had to make efforts to improve its quality and models, increasing localisation rate (NDH) and reducing production costs.

To achieve the ratio of localisation of passenger cars to 50 percent by the end of 2020, TC Motor has 25 satellite enterprises of Hyundai in South Korea that have been carrying out investment procedures in Ninh Binh. The group has also been implementing projects such as adjusting the capacity of tourist car factories from 40,000 cars / year to 80,000 cars / year; the project adjusted design, increasing the area of land using Car Service and Infrastructure Center from 4ha to 35ha; investing in a passenger car factory with a capacity of 100,000 cars / year. When these projects are completed, the capacity of TC Motor will reach 180,000 tourist cars / year, four times the current level.

All Hyundai brands in Vietnam are manufactured at TC Motor's factory.

Firmly with large platform

THACO not only owns the most modern Mazda automobile factory in Southeast Asia, but also in 2019, inaugurated a high-class passenger car factory with investment of up to VND 4,500 billion in Chu Lai- Truong Hai (capacity of 20,000 vehicles / year)

This factory is equipped with modern production lines, automation and the latest technology. The factory will produce all segments of Peugeot passenger car and will eventually produce other car brands.

In 2019, THACO also expanded and upgraded THACO KIA factory in the direction of automation and management towards digitalisation, increasing the capacity from 20,000 vehicles per year to 50,000 vehicles per year with a total investment of 450 billion dong.

Last year THACO built a new truck factory with a capacity of 50,000 vehicles per year.

As the only enterprise has factories producing all types of cars in Vietnam (trucks, buses, passenger cars bearing the brands Kia, Mazda, Peugeot), in 2019, THACO led Vietnam’s market with nearly 75,000 tourist cars and some 33,000 trucks and buses.

Investing in developing spare parts factories, THACO is exporting automobile components, joining the global value chain. Its main export markets include South Korea, Japan, Russia, the Philippines, Kazakhstan, Malaysia, Singapore, Turkey, Bangladesh, Thailand, Indonesia, Australia and Germany. The export value of THACO parts and accessories is estimated at US$25 million.

VinFast automobile factory is a place where the first Vietnamese cars were manufactured

Intense a Vietnamese brand

In 2019, VinFast was considered a "miracle" when it did all that had been announced.

In June 2019, VinFast inaugurated VinFast Automobile Factory in Dinh Vu Industrial Park (Cat Hai, Hai Phong). VinFast’s automobile factory has the scale and production capacity of the most modern type in Vietnam (with designed capacity of phase 1 of 250,000 vehicles / year, phase 2 of 500,000 vehicles / year, production speed of approximately 38 cars / hour). So, after only 21 months, this enterprise quickly completed a large and the most modern factory not only in Vietnam but also in the whole region.

This is considered a turning point of the Vietnamese car industry moving from processing to owning the production value chain.

In 2019, after the handover of the first cars, in July 2019, VinFast launched high-class VinFast Lux branded cars (Lux A2.0 5-seat sedan and SUV 7 place Lux SA 2.0). All VinFast’s products have modern designs, guaranteed quality and are certified to NCAP 4 and 5-star Asean collision safety standards, while the engine meets Euro 5 emission standards.

In 2019 and 2020, VinFast is expected to launch 12 models of cars and electric motorcycles.

In a very short time, this company has not only developed rapidly in the domestic market, but also externallt. In the last month of 2019, Bloomberg reported a report on VinFast and the headline read, "The richest man in Vietnam bet $2 billion to sell cars to the US market."

With fast-growing milestones, Vietnamese car brand VinFast since its launch at the Paris Motor Show 2018 delivered the car in the Vietnamese market in 2019, and will export electric cars to the US in the year 2021.

New strategy

THACO, TC Motor, Vinfast , with determination and strategy to invest in domestic automobile production, taking advantage of a key time thanks to the strong support policies of the Government and other ministries and sectors, they have initially affirmed the role and position for the domestic automobile market and had strong development in both quantity and quality. Many large firms across the world have automobile manufacturing and assembly activities in Vietnam. Some are deeply involved in the global automotive production chain.

The report of the Ministry of Industry and Trade shows that currently, there are about 350 enterprises producing cars related to the whole country, including about 40 enterprises have produced and assembled cars with the domestic production and assembly output meeting 70 percent of demand for cars under 9 seats in the country.

Two domestic enterprises, TC Motor and THACO account for more than 50 percent of assembled and imported vehicles; 60 percent of cars are produced domestically.

However, domestic production is facing fierce competition with imported cars that have preferential tax advantages under commitments. In 2019, the number of cars from ASEAN countries (0 percent import tax) increased rapidly with a turnover of nearly $3 billion, doubling compared to 2018.

Along with that, in the future, many new generation bilateral and multilateral Free Trade Agreements (FTA) such as EVFTA (Vietnam - EU FTA), Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) ) and RCEP will continue to be implemented, so Vietnam will gradually reduce and eliminate import taxes on vehicles originating from countries such as the EU, China, South Korea and Japan.

This will make it very tough for domestic manufacturing enterprises to survive and develop.

After decades of poor results, the Vietnamese automobile industry is gaining new development milestones, event miracles. This result is aided by the Government's policies and the efforts of enterprises. Tt is time we needed a new strategy and reasonable policies to promote the growth of Vietnam's automobile industry.