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Car localisation ratio low because of dearth of suppliers
Vietnam has 50 automobile assemblers, while it only has 60 car part suppliers. Meanwhile, Japan only has 14 automobile manufacturers but 24,800 car part suppliers.
According to Michael Pease, General Director of Ford Vietnam, the manufacturer only has 30 local partners which provide car parts and accessories, including the new Vietnamese car part supplier Harada Company in the southern province of Dong Nai.
As a result, the US manufacturer has to import car parts from hundreds of partners worldwide to assemble in Vietnam. That explains why the local content of Ford’s products is low, at 20% in terms of value.
Toyota Vietnam is now among the automobile manufacturers with the highest localisation ratios in Vietnam, at 33%. Toyota Vietnam has invested $5mil in a bodywork workshop which will help it raise the localisation ratio of the Innova to 37%.
The manufacturer has decided to make heavy investment in less-than-9-seat cars because of good sales of the class. In August, Toyota sold 1,300 units, raising the total number of units sold in the first eight months of the year to 10,838.
According to Phan Dang Tuat, Head of the Industry Policy and Strategy Institute under the Ministry of Industry and Trade, Vietnam now has 50 automobile manufacturers, but it only has 60 car part suppliers.
Strategists have many times urged the development of supporting industries to help develop the domestic automobile industry. Ngo Van Tru, Deputy Director of the Heavy Industry Department under the Ministry of Industry and Trade, said that by 2025, Vietnam will consume 600,000 vehicles a year, adding that Vietnam has 10 more years only to develop its automobile industry.
Strategists say that Vietnam needs to have suitable policies to encourage investments in supporting industries which would provide products for domestic use and export.
Thailand, for example, in 20 years of developing its automobile industry, has become the production base in the region for some automobile manufacturers. For example, Toyota pick-ups are being made in Thailand for the Asian market. Ford has injected $25mil in the Philippines to set up an engine assembly plant. Meanwhile, Vietnam, according to strategists’ economic geography analysis, could potentially become the chief supplier of automobile parts for the whole region.
Toyota said it has been exporting car parts for the last two years, earning over $10mil.
VNN
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