Auto exports target 100,000 products
Vietnamese automobile manufacturers are cherishing the dream of entering the world market.
The first batch of 15 buses with Thaco brand has been exported to the Philippines. Thaco, the manufacturer, and Auto Delta, the importer, have also signed a contract on selling another 200 products in 2020.
The 15 buses belong to the product line with completely new design. They have a localization ratio of 45 percent, use an engine meeting Euro 5 emission standard, and are energy saving and friendly to the environment.
In 2019, Thaco exported 186 CBU (complete built unit) automobiles to ASEAN and the US, including 120 Kia Cerato to Myanmar. The manufacturer plans to export 1,000 products this year.
Together with Kia Motors, Thaco will for the first time export Kia Sedona, the large-size SUV model to Thailand, one of the region’s leading automobile manufacturing center.
|Analysts say that Thaco’s products are competitive in the region because the assembling cost in Vietnam is lower than Thailand. Meanwhile, the baht continues appreciating, which brings competitiveness to Vietnam’s products in the Thai market.|
Analysts say that Thaco’s products are competitive in the region because the assembling cost in Vietnam is lower than Thailand. Meanwhile, the baht continues appreciating, which brings competitiveness to Vietnam’s products in the Thai market.
Besides Thaco, VinFast also puts high hopes on exports. The young manufacturer is planning to export electric cars to the US by 2021. Russia, Europe and ASEAN are also being eyed by VinFast.
“The domestic market is too small,” a senior executive of VinFast said, explaining why VinFast wants to export cars. “Besides, selling products abroad is the key to profit"
Vietnamese automobile manufacturers not only want to export CBUs, but car parts as well. In 2019, Thaco exported a considerable amount of automobile parts to South Korea and Malaysia, worth $14.5 million.
This is a modest figure, but Thaco believes that the export consignment will pave the way for Vietnam to join the global value chain.
However, Vietnamese manufacturers understand that they will face big challenges in the world market.
“The technical barriers set by importing countries are very big. To prepare for export to the US and Japan, Thaco had to spend onr year to have its products examined and to get certificates. The time was six months for Thai market and 4.5 months for the Philippines,” said Thaco’s president Tran Ba Duong.
Exporters also have to set up maintenance service systems and develop customer care service overseas. After all, the quality of products must be high to conquer the heart of consumers, especially in choosy markets such as the US and Europe.
According to Michael Dunne, CEO of ZoZo Go LLC, a consultancy firm, Vietnam needs to manufacture at least 100,000 products a year at competitive prices, develop a global brand, and establish a network of supporting services to be able to penetrate the world market.
Vietnam still has to import car parts for domestic assembling. As a result, the production cost is high and domestically made products remain less competitive than imports.
The luxury tax rate on electric automobiles and the added value created in Vietnam in automobile manufacturing and assembling may be cut to zero percent to encourage the development of supporting industries.