VN outlines strategy to boost domestic automobile industry

April 20, 2024 - 08:26
The strategy should also aim to increase the market share of domestically produced automobile products gradually, with the intent to replace imported products.


Việt Nam has outlined a strategic plan to develop domestic automobile industry until 2045. — Photo of

HÀ NỘI — Promoting the development of Việt Nam's automobile industry until 2045 requires a comprehensive strategy that addresses various aspects of the industry.

This was laid out under a Ministry of Industry and Trade draft outline strategy for the development of the automobile industry until 2030, with a vision to 2045. It is expected that by June this year, the Ministry will complete and submit it to the Prime Minister for approval in September.

According to industry insiders, the strategy should consider various indicators and targets to steer the industry in the desired direction. These indicators can include product and output measures, market share goals for domestically produced vehicles, targets for exports and participation in the global value chain, and an emphasis on green and energy-saving vehicle models to replace fossil fuel-based vehicles.

The strategy should also aim to increase the market share of domestically produced automobile products gradually, with the intent to replace imported products.

The strategy should address the development of production technology and supporting industries for the automobile sector. This focus on technology will enable Việt Nam to enhance its competitiveness and become a supplier of components and spare parts in the global automobile production chain. Export orientation and participation in the global value chain should also be a key consideration to expand the industry's reach and contribute to the country's economic growth.

Previously, the strategy for developing Việt Nam's automobile industry to 2025, with a vision to 2035, emphasised leveraging internal resources and establishing collaborations with major international automobile manufacturers. It aimed to develop the industry in sync with transportation infrastructure, meet domestic demand, enhance competitiveness, and contribute to economic restructuring.

The priority product groups identified in the previous strategy were trucks and passenger cars with 10 or more seats, passenger cars with up to nine seats, specialised vehicles and supporting industries. The focus was on developing multipurpose small trucks for agricultural and rural production, medium and short-range passenger cars for inter-provincial and domestic routes, and small personal vehicles with low energy consumption. Specialised vehicles and small multi-functional agricultural vehicles were also highlighted to address specific needs.

Regarding supporting industries, the strategy aimed to manufacture important components and details locally, such as transmissions, gearboxes, engines and car bodies. Collaboration with major automobile manufacturers was emphasised to identify suitable spare parts and components for Việt Nam to produce, thus integrating the country into the global production-supply chain. This approach would require investment in advanced technology and production for export.

The goal of the strategy is to position Việt Nam's automobile industry as a significant sector that meets domestic market demand, competes globally, stimulates the development of other industries, and becomes a supplier of components and spare parts in the global automobile production chain.

By 2035, total vehicle production is set to reach about 1,531,400 units, of which 9-seat cars will be about 852,600 units, vehicles with 10 or more seats will be about 84,400 units, trucks will be about 587,900 units, and specialised vehicles will be about 6,500 units.

The proportion of domestically produced and assembled vehicles will account for about 78 per cent of domestic demand. The goal of the strategy is to further strengthen the development of supporting industries to meet the increasing demand for components and spare parts. The plan is to form a basic supporting industry for automobile production, aiming to meet approximately 35 per cent of the demand for components and spare parts. Subsequently, by 2035, the strategy targets meeting over 65 per cent of the demand for domestic automobile production and assembly.

To achieve these goals, the strategy emphasises the identification and establishment of strategic partnerships, encouraging investments in projects that can create markets for supporting industries. The focus is also on promoting the production of environmentally friendly vehicles, including fuel-efficient vehicles, hybrid vehicles, biofuel-based vehicles, and electric vehicles, to comply with emission standards.

Improving product quality to meet international standards is another key aspect highlighted in the strategy. This involves forming automobile industry centres or clusters through production organisation and restructuring. The strategy also encourages collaboration and linkages between automobile manufacturing and assembly enterprises, supporting industry enterprises, research and development establishments, and training institutions across all economic sectors. This collaboration aims to enhance investment efficiency and specialisation capabilities.

The government has introduced specific policies to support domestic production in the automobile industry. For instance, Decree 101/2021/ND-CP provides import tax incentives for components and spare parts used in domestic automobile production and assembly. There are measures such as reducing registration fees for domestically produced and assembled vehicles to further encourage the growth of the industry.

By implementing these policies and strategies, Việt Nam aims to boost the production and export of vehicles, with a target of approximately 90,000 units exported by 2035. These efforts will not only drive the development of the automobile industry but also contribute to the growth of other sectors, improve product quality, and align with international standards and environmental requirements.

The policies to support the implementation of the automobile industry development strategy in Việt Nam have been somewhat limited, particularly in terms of supporting the development of electrified vehicle models. It's important for the government to continually assess and update policies to keep pace with the rapidly changing automotive landscape.

Việt Nam has experienced significant changes in population size, economic growth and the quality of growth in recent years. These changes have undoubtedly influenced the scale, products, and domestic car consumption market in the country. To adapt to these shifts, it is crucial to have comprehensive and responsive policies that address the evolving needs and preferences of consumers.

The global auto industry is undergoing substantial transformations in terms of production technology, product types, and designs. It is essential for Việt Nam's automobile industry to stay abreast of these changes to remain competitive. Countries in the region, particularly China and Thailand, have made impressive strides in their automobile industries, deepening their participation in the value chain. Without appropriate policy mechanisms, there is a risk that the domestic vehicle market in Việt Nam may decline or face challenges in competing with these regional counterparts.

It is important to establish a clear roadmap for the development of the automobile industry, taking into account both domestic and global trends. This roadmap should provide guidance on key milestones, targets, and policy measures to ensure the industry's long-term growth and competitiveness. — VNS