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1 FORECASTING THE TREND OF DEVELOPMENT OF VIETNAM’S AUTOMOBILE INDUSTRY IN THE PERIOD 2011-2020
the prices. In fact, joint venture companies did not keep their
commitment to get localization rate of 30-40% in 10 years.
Currently, localization rate in products manufactured by joint venture
companies gets only 2-12%. Supporting industries in Vietnam
provide just simple and low valuable products for car manufacturing
process such as tire, tube, battery, electric wire, car chair, etc.
In general, there is no clear orientation from the government for the
development of Vietnam’s automobile industry.
4.1.2 Development orientation by Government in other country for
development of automobile industry.
To forecast the trend of development of Vietnam’s automobile industry for
the period of 2011-2020, taking a look at neighboring countries and at
Vietnam itself will be essential:
From 1985, Malaysia government promulgated a policy to protect home
manufactured cars with an ambition to take control of the automobile
However, domestic cars in Malaysia can only be consumed in domestic
market with a falling market share. Future of Malaysia’s car makers are
foreseen to be bankrupted or merged with a big car maker. Effectiveness of
the protection policy can be seen clearly.
Recently, Malaysian government decided to remove protection policy,
creating a market with higher competition. Inhabitants benefit from this
Thailand is now considered as “Detroit of Asia”, as a center providing cars
and accessories to many big car makers all over the world.
Thailand did not do the same way as Malaysia or Vietnam did. Until now,
Thailand has not have its own brand name cars but it has established 700
car component manufacturers and 1000 auxiliary manufacturers.
It can be said that Thailand is in the right direction in developing
automobile industry by participating in global production chain, attaching
special importance to a specific product, not developing domesticmanufactured cars at all costs.
In 1994, Chinese government promulgated Policy of developing
automobile industry, recognizing relationship between car and family for
the first time. It created a large market for cars and that period is considered
as a remarkable milestone in development of China’s automobile industry.
At first, it also protected domestic automobile industry. This resulted in an
impasse. In 2000, policy of free trade and tax support, with removing many
trade and investment barriers, made a good condition for development of
domestic car market and car export.
Thus, with all the trends, Vietnam’s automobile industry has a good chance
to export car,
Development orientation for Vietnam’s automobile industry
Joint venture enterprises:
They manufacture car styles which are liked in the foreign markets. On the
contrary, they import car styles which have not been assembled or
manufactured in Vietnam through their relationship with their mother
companies abroad. Gradually, they only import prevalent car styles which
are manufactured by their branch abroad. The way automobile
manufacturing joint venture enterprises do is the same the way electronic
joint venture enterprises did before.
The way domestic companies do to develop is to build their own brand
name cars or to assemble foreign cars. Development process of some
representative companies will be considered to assess development trend of
automobile domestic companies. Two representatives must be Vinaxuki and
Truong Hai Automobile (Thaco)
According to statistical data from VAMA, Truong Hai Auto’s products
(trucks, passenger cars) with trade name of Thaco make up 40% of the
market share all over the country. Analysis on the developing process of
Truong Hai Auto may reveal the way Truong Hai Auto develops:
- At first, Truong Hai assembled light trucks for Kia, a Korean littleknown car manufacturer. From 2001 to 2005, there were 15,000
Kia’s light trucks sold, making up 45% of light truck market share in
- In the end of 2004, Truong Hai put Chu Lai truck/passenger car
assembling factory into operation with capacity of 10,000
- In 2007, Truong Hai reached localization rate of up to 50%.
- In 2008, Truong Hai invested in tourist car assembling factory based
on technology transferred by HYUNDAI KIA-Korea.
- In 2010, a line for assembling Mazda cars was put into operation.
Development orientation of Truong Hai is to specialize in assembling
famous brand name cars, beginning from assembling less famous brand
name cars. On that basis, Truong Hai can increase localization rate so that
supporting industries can develop. With this policy, Truong Hai is on the
way of development. Many brand name cars are assembled by Truong Hai
such as Kia New Morning, Hyundai, King Klong…
Xuan Kien Automobile (Vinaxuki)
- Vinaxuki has produced 38 truck styles, 2 pick-up truck styles, 2 car
styles and 02 passenger styles with localization rate of 22-44%.
- Vinaxuki continues to invest in high-tech so that it can get
localization rate of 70-80% by 2016 for 15 styles of truck, passenger
car, making up 7-8% of Vietnam’s automobile market share.
- In the middle of 2009, Vinaxuki signed a contract with Nagara
(Japan) to produce Vietnamese tourist cars. The contract contents
included design, technology transfer and supervision of
manufacturing car in Vinaxuki.
Orientation of Vinaxuki is to build up its own brand name cars. Vinaxuki is
only famous for light trucks now.
REGULATION ON THE DEVELOPMENT OF VIETNAM’S
AUTOMOBILE INDUSTRY FOR THE PERIOD 2011 – 2020
Based on analysis on what is achieved, shortcomings and reasons for
underdevelopment of Vietnam’s automobile industry, some suggestions are
made as follows:
For strategy: it is necessary to review Vietnam’s development strategy for
automobile industry, not follow orientation to leapfrog but match reality.
For served object: Consumers are the major served object. And most of
Vietnamese with low income can not ever buy a car, unless it is sold with a
For tax policy: the government needs to promulgate new tax policy with
some flexible taxes such as environment tax, tax on roads, insurance
depending on each characteristic of each car.
For automobile manufacture and assembly companies: giving priority to
investors who invest in manufacturing accessories, car styles satisfying
following conditions: consistent to market conditions of Vietnam, with
good quality and environment-friendly.
For awareness: Being aware that cars with less than 09 seats (high-class
cars) are not luxury goods. It is a motive power for the development of the
nation. It is essential to promulgate proper tax policies to promote the
development of domestic automobile industry as well as lowering the
For technology: giving priority to investors who invest in high technology,
have many different brand name cars. Proposing technical regulations for
manufacturing cars, especially regulations for emission for which Euro III
or Euro IV can be applied.
For businesses: an equality policy for all forms of business who take part
in Vietnam’s automobile industry is essential.