Vietnam’s auto market has witnessed remarkable growth in the past decade. Car ownership in the country has tripled in just 13 years, reflecting the rising affluence and demand for personal vehicles. The Ministry of Industry and Trade reports that by the end of last year, the number of registered cars reached 6.31 million, marking a significant shift in the nation’s automotive landscape.
Rapid Growth in Vehicle Ownership
Car ownership in Vietnam surged to 63 vehicles per 1,000 people by 2023. This increase is attributed to a growing middle class, expanding infrastructure, and greater access to financing options. The number of new vehicles registered annually reached 408,500 last year, a clear sign that the automotive market is booming. The ministry expects annual vehicle sales to exceed one million by 2030 and five million by 2045, reinforcing Vietnam’s place among the top auto markets in Southeast Asia.
Vietnam’s Position in the Southeast Asian Market
In 2022, Vietnam’s record sales of 500,000 vehicles placed it among the four largest auto markets in the region, alongside Thailand, Indonesia, and Malaysia. This achievement underscores the country’s increasing significance in the global automotive sector. As the market grows, there is a concerted push towards making the automotive sector more sustainable and locally driven.
Focus on Green and Locally Manufactured Vehicles
Looking ahead, the Vietnamese government has set ambitious targets for the auto industry. By 2045, it aims for at least 80% of the vehicles on the road to be “green” vehicles, contributing to global sustainability efforts. The same proportion is expected for domestic vehicle production. Currently, about 40% of the vehicles in Vietnam are imported as completely built units. To reduce reliance on imports, the government is working to develop supporting industries to manufacture key components, such as engines, transmissions, and gearboxes.
Challenges in the Domestic Auto Supply Chain
While Vietnam’s auto industry has made significant strides, local manufacturers still face challenges. Many local companies remain labor-intensive and produce only basic auto components. In comparison, countries like Thailand have a robust supply chain with 710 tier-one and 1,700 tier-two suppliers. Vietnam currently has just 33 tier-one and 200 tier-two suppliers, highlighting the gap in capabilities that needs to be addressed for the country to become a true automotive manufacturing hub.
Conclusion
Vietnam’s auto industry is growing at an impressive rate, driven by increasing ownership, robust sales, and the government’s push for sustainable vehicles and local production. As the market matures, the focus will shift towards enhancing manufacturing capabilities and meeting green vehicle targets. With the right policies and investments in the supply chain, Vietnam is poised to solidify its position as a key player in Southeast Asia’s automotive sector.
