Professional Documents
Culture Documents
Vietnam’s auto part industry is fragmented with 241 manufacturers, in which, 134 are FDI enterprises
and 107 are local enterprises. Besides, the majority of auto part manufacturers in Vietnam engages in
manufacturing electric & electronic parts and wheel & tires. Among these two sectors, local firms take
up 42% and 64%, respectively.
Export value
According to data from the General Department of Customs, as of July 15, 2021, Vietnam's exports of
auto parts and vehicles to foreign countries reached more than USD 5.9 billion, of which auto parts
accounted for USD 3.7 billion.
SECTOR DRIVERS
- The strong GDP growth of Vietnam and stabilized inflation rate has been catalysts for the rising in
citizens’ purchasing power. GDP per capita of Vietnam is forecasted to reach USD4,700 - 5,000 by 2025,
allowing the population to meet the other needs besides physiologies.
- FTAs equip Vietnam with larger opportunities for economy development through deeper integration
with international trade.
- According to the Ministry of Industry and Trade, of the existing component suppliers, more than 90%
are FDI enterprises. FDI companies are evaluated to have more advanced technology implementation,
thus, the situation could create more intense competition and force the domestic companies to invest
more intensively in R&D and staff training to compete.
SECTOR INSIGHT
Government Policies
- Due to the luxurious characteristic of cars under the perception of Vietnamese government, the
products are classified under the special tax regimes, which push the retailing price of cars in Vietnam to
one of the most expensive in the world and discourage the sales of the industry. For Vietnamese citizens
to own cars, they would have to pay up to 15 different types of taxes and fees.
- The Vietnamese government has imposed a variety of policies aiming to protect the sustainability and
development of domestic automotive industry, such as high taxes on imported vehicles. However, the
policies seem ineffective as domestic companies mainly operate in assembly lines, not manufacturing
with high intensity of R&D. In addition, FTAs is seen to drive down the imported tariffs, which raises the
fierce competition for domestic manufacturers.
Infrastructure
The majority of auto parts and components are still imported from overseas due to the immature
supporting industries in Vietnam. There are four reasons for the low localization rate: