Vietnam is setting ambitious goals to transform its automobile industry by 2030, aiming to significantly boost the production of domestically manufactured vehicles. According to a draft strategy recently submitted to the government, the market is projected to grow at an annual rate of 14-16% by the end of the decade, with overall consumption exceeding one million vehicles. Notably, electric and hybrid vehicles are expected to comprise 350,000 units, aligning with the country’s push towards environmentally friendly transportation.
By 2035, the draft strategy envisions Vietnam producing 1.5 million vehicles annually, meeting 78% of domestic demand and exporting around 90,000 units, with a particular focus on green technologies. This bold move reflects Vietnam’s commitment to becoming a leader in eco-friendly vehicle production in the region.
Promoting Domestic Production and Supporting Industries
One of the key goals outlined in the strategy is to increase the market share of domestically produced cars. Currently, Vietnam’s car ownership stands at 63 cars per 1,000 people, with passenger cars accounting for 30 out of every 1,000 vehicles. While this represents significant progress, the country is still far behind some regional counterparts. To address this, the government plans to prioritize the expansion of the domestic car production industry and enhance its competitiveness in the global market.
The draft strategy also emphasizes the importance of supporting industries, particularly in the production of auto parts and components. By 2030, the goal is for 55-60% of the demand for components to be met through local production, with this figure rising to 80-85% by 2045. Vietnam’s mechanical engineering sector, which currently comprises around 30,000 enterprises, plays a crucial role in achieving these targets. Strengthening this sector will not only reduce the country’s reliance on imported parts but also create new economic opportunities for local businesses.
Collaborating with Global Manufacturers
To successfully implement this strategy, Vietnam is looking to collaborate with international automobile manufacturing giants. The draft emphasizes the importance of building partnerships with global corporations to develop domestic capabilities, particularly in vehicle manufacturing and technological innovation. This collaboration is expected to not only boost local production but also support the development of a modern transportation infrastructure that meets growing domestic demand.
Nguyen Chi Sang, General Secretary of the Vietnam Association of Mechanical Enterprises, highlighted the increasing number of investments and vehicle models being produced domestically. He believes that these developments will offer significant opportunities for local suppliers to expand their presence in the global supply chain.
Overcoming Current Challenges
Despite the progress, the Vietnamese automobile industry faces several challenges. The localization rate of vehicle production remains low compared to other Southeast Asian nations such as Thailand and Indonesia, which average a localization rate of 65-70%. Furthermore, the cost of assembling vehicles in Vietnam remains higher than in neighboring countries, limiting the competitiveness of locally produced cars.
To address these issues, leading companies such as THACO Group are working to increase the localization rate. By the end of 2024, THACO plans to invest in several new factories to boost production of components and spare parts, with a goal of raising the localization rate to 45% for passenger cars.
Future Prospects
Vietnam’s automobile industry is poised for major growth as it continues to adapt to technological advancements and increasing demand for environmentally friendly vehicles. By developing local manufacturing capabilities and enhancing its supporting industries, Vietnam aims to become a major player in the global automobile market while meeting its domestic needs efficiently.
