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Auto manufacturers reduce production, increase imports

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Though continuing investment in their production bases, foreign-invested automobile manufacturers in Vietnam are placing high expectations on car imports.

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Automobile manufacturers continue investment in production bases

 

Ford Vietnam, for example, stopped assembling Fiesta cars after eight years in Vietnam. Fiesta, together with EcoSport and Focus, is a well-invested small model. Hitting the market in mid-2011 with a sedan and hatchback, the B-class model is equipped with many new technologies. 

Over 1,800 products were sold within six months, amounting to 18 percent of the sales of small automobiles. 

However, the sales of Fiesta saw a dramatic decline in 2012 in the context of the gloomy market with only 900 cars sold. In the following years, the sales continued falling with 847 cars sold in 2013, 829 in 2015 and 949 in 2016. Less than 400 products were sold in 2018.

After 20 years of development in Vietnam, most automobile joint ventures are not focusing on car assembling, but they are importing cars for domestic sale. 

In 2017, Toyota stopped assembling Fortuner, a favorite model in Vietnam, shifting to importing Fortuner from Indonesia for domestic sales. 

In early 2018, Toyota continued importing three new models – Wigo, Rush and Avanza. Of its 10 car models available in Vietnam, six are imports.

Similarly, among Honda’s seven car models available in Vietnam, six are imported from Thailand. Toshio Kuwahara, CEO of Honda Vietnam, explained that it is impossible to assemble all car models in Vietnam because the domestic market remains small.

Foreign invested enterprises are still pouring more money into their facilities here even though they have scaled back production .

Ford Vietnam’s CEO Pham Van Dung confirmed that despite the big changes in business strategies, Ford has invested millions of dollars more in the production line in Hai Duong province.

The company has equipped its bodywork division with robots to improve the stability and aesthetics of bodywork. It has also spent money on 20 welding machines using high technology to improve the welding point quality.

One reason cited by automobile manufacturers to explain their decision to strengthen imports is the weak supporting industries in Vietnam. As they have to import the majority of car parts needed for domestic assembling, the production cost is high and competitiveness weak.

There are 300 enterprises in the automobile supporting industries in Vietnam. Of these, only 84 enterprises are first-class vendors, and 145 are second- and third-class vendors. 

The number of enterprises is not enough to provide car parts to 20 automobile manufacturers.

An automobile is assembled from 30,000-40,000 car parts. About 90 percent of car parts in the country are imports.

 

Source: VietNamNet

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