A stronger automotive industry with higher participation of foreign firms will boost the domestic auxiliary industry, businesses said last week.

Buyers take a look at an Xpander car at a Mitsubishi showroom.
(Photo: autopro.com.vn) 

"The Vietnamese automobile and motorbike industries have been very lively in the last two decades and there is still room for further development," Nghiêm Văn Hùng, assistant manager at sales and marketing department, Inoac Vietnam Co Ltd, told Việt Nam News.

A large number of products are now produced and assembled in the country and foreign automakers have moved their plants to Việt Nam, he said.

Foreign companies have received preferential policies in terms of tax and administrative work, so the number of foreign companies in Việt Nam has increased, Hùng added.

Most foreign automakers come from Japan. Mitsubishi in 2018 inaugurated its first assembly plant in the southern province of Bình Dương, becoming the seventh Japanese automaker moving production to Việt Nam.

Some Indonesian carmakers and part companies are considering moving their plants to Việt Nam as well because they see potential in the Vietnamese market.

According to Indonesian Ambassador to Vietnam Ibnu Hadi, auto and autoparts are Indonesia’s two biggest exports to Việt Nam in terms of volume.

In the first four months of 2019, Việt Nam imported nearly 58,300 cars in total, worth US$1.3 billion. Of the figure, Indonesian car exports accounted for more than 12,700 units, worth $190 million.

Last year, Indonesian companies exported $289 million worth of cars to Việt Nam. The figure is expected to reach $600 million this year.

Sales volume of Mitsubishi Expander topped Indonesia’s car exports in the first four months, with more than 17,600 car units. Of the figure, more than 3,700 units were exported to Việt Nam.

Therefore, Indonesian companies are looking to expand their influence in Việt Nam by setting up offices and looking for local part suppliers.

According to Prihatanto Agung Lesmono, president director of Astra Visteon Indonesia, his company is looking for more tier-2 local suppliers with higher quality. Astra Visteon Indonesia has an office in Việt Nam, known as Astra Visteon Vietnam Co Ltd.

However, a number of Vietnamese part suppliers do not meet quality standards so they need improvement to meet the localisation requirements, he said.

But the competition between local suppliers would get fiercer, Hùng said, as foreign companies want higher quality and cheaper parts.

More Chinese companies have been present in Việt Nam as they shift production from China to avoid US tariffs, according to Hùng. Their products are of medium quality but the prices are much cheaper.