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The “unfortunate destiny” of Vietnam’s automobile industry
While giant automobile manufacturers in the world are planning to make heavy investments in production bases in the Asia Pacific, Vietnam is failing to catch the investment capital flow.
350 million dollars is the sum of money that Ford Motor has invested in Thailand to upgrade and expand the existing factory that focuses on making pickups -Ford Ranger – expected to hit the Thai market in May. Sources said that Ford Ranger pickups will not only be sold in Thailand, but will also be exported to 180 markets worldwide, including Vietnam.
Thailand not only has caught the 350 million dollars worth of investment. Besides the Ford’s investments about 170 satellite producers, who provide car parts in Thailand, have also joined the Ford Ranger’s production line.
However, 350 million dollars is not the only sum of money Ford has injected in the factory in Thailand. Last year, in 2010, Ford Motor announced an investment deal of 450 million dollars to build a new factory that will specialize in making new generation Ford Focus sedans from 2012 onward.
Joe Hinrichs, Ford’s President in Asia Pacific once said that Thailand’s experience and knowledge in the global automobile industry plays a very important role in the development strategy of Ford Motor. He has also revealed the group’s hope that Asia Pacific and Africa will contribute up to 70 percent to the robust growth of Ford Motor in the next decade.
Of course, in order to make this a reality, Ford Motor has to make investments in other places as well. Besides the investments in Thailand, in 2010, Ford Motor built one more factory specializing in making engines and another automobile factory in China. It also doubled the capacity of the engine factory in India, and it is upgrading an operational factory in South Africa. Besides, another plan is under implementation, in which 50 new products will be brought to the regions from now to 2015. In ASEAN countries, eight completely new products will be introduced in the next five years.
The unfortunate thing for Vietnam is that while the automobile manufacturer is making heavy investments in Vietnam’s neighboring countries, China and Thailand, or in South Africa, the giant is not directing much attention to Vietnam, which has been well known as the second biggest market among ASEAN nations with a young population.
Regarding pickup products in Vietnam, in 2010, the growth rate in the sales of pickup was very impressive at 20 percent. However, the noteworthy thing was that all the pickups available in Vietnam, including Ford Ranger, Toyota Hilux, Mitsubishi Triton or Nissan Navara were imported under the mode of complete built unit (CBU) from Thailand.
Meanwhile, analysts have pointed out that the current economic difficulties plus the policy on restricting public investments will certainly affect the sales of automobile manufacturers. However, the analysts also said that these would not be the main factors that affect Vietnam’s automobile industry.
“The most important thing is not where you are standing, but how you will step,” Laurent Charpentier, General Director of Ford Vietnam said when he took the post of general director two months ago. Commenting about the heavy investments in China, he said that the Chinese government declares transparent policies with stability for 20-30 years, which allows investors to take initiative with their business plans.
In Vietnam, there are two automobile manufacturers who have a high locally made content ratio, Truong Hai and Xuan Kien. The manufacturers have been focusing on making trucks. However, Bui Ngoc Huyen, General Director of Xuan Kien Automobile, only plans to sell 7000 trucks this year, because he thinks that clients will find it difficult to arrange money.
Tran Ba Duong, General Director of Truong Hai Automobile, related that in 2010, Vietnam failed to catch the investments from Kia Motor, which planned invest, up to a billion dollars to make cars right in ASEAN countries. The main reason was that they did not see many fruitful opportunities that would lead them to inject money in Vietnam.
vietnamnet, TBKTVN
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