Vietnam’s automotive industry is the fourth largest in Southeast Asia, behind Indonesia, Thailand, and Malaysia. At the same time, it is trying to woo automotive manufacturers as it prioritises investment projects in high technology, supporting industry, and digital economy innovation.
Ford vehicles being assembled in Vietnam
Nguyen Thi Thu Ha, general director of Invest Global told Vietnam News Agency (VNA) that the country has great potential in the automobile industry in making an important contribution to the nation’s economy.
A VinFast SUV rolling off a plant in Vietnam
However, the number of Vietnamese suppliers in the auto industry is very small and only a few domestic suppliers could participate in the supply chain for automobile manufacturers and assemblers in Vietnam.
Meanwhile, the car ownership rate in Vietnam is only 2.3% or 23 cars per 1,000 people – 10 per cent of Thailand’s and 5 per cent of Malaysia’s car ownership rate. Even though the figures are small, a representative of the Vietnam Institute of Strategy and Policy for Industry and Trade, Dang Hoang Mai, said that the socialist republic has the potential to develop the electric vehicle (EV) market in the future.
The Kia Seltos is one of Vietnam's best-selling SUVs and is assembled there
As the country’s income level grows, so is the forecasted growth of new car sales but despite this, Vietnam’s auto manufacturing supporting industry did not grow as expected. The localisation rate for personal cars with up to 9 seats is reportedly less than 20% on average.
The state media has also reported that India’s total investment capital into Vietnam only accounts for 0.2% of the total foreign direct investment (FDI) that 139 countries and territories have invested in.
Even so, the world’s sixth largest economy found potential in Vietnam’s automotive industry with India’s Ambassador to Vietnam, Pranay Verma, said that the Automotive Component Manufacturers Association of India (ACMA) wanted to explore investment opportunities in the socialist republic.
ACMA has more than 800 members and contributes 85% of sales in the Indian auto parts industry. Could this help to spark a new interest in Vietnam’s small but growing automotive industry? The country's carmaker, VinFast is expanding into the United States by the end of 2022 as well as focusing entirely on EVs by then.