Vietnam’s Automotive Localization Rate: Key to a Self-Reliant Industry?

“Wealth doesn’t come to those who sleep late, prestige doesn’t surpass those who transport goods” – this humorous saying partly reflects the important role of vehicles in Vietnamese life. However, few people know that behind those vehicles rolling on the road is a long story about “Vietnam’s automotive localization rate”. So, what is the localization rate? Why is it so important? Let’s explore with xetaihanoi.edu.vn!

Vietnamese Automotive Industry

The Significance of Vietnam’s Automotive Localization Rate

Imagine a car as a giant jigsaw puzzle, made up of thousands of different components and parts. The automotive localization rate is the percentage of the value of those components and parts that are manufactured in Vietnam.

Simply put, the higher the localization rate, the more self-sufficient we are in automobile production, thereby reducing dependence on imported components.

What is Vietnam’s Current Automotive Localization Rate?

According to statistics, Vietnam’s current automotive localization rate is still quite modest, fluctuating around 10-20% for passenger cars and 30-40% for trucks. This figure is much lower than that of countries in the region such as Thailand (80-90%) or Indonesia (70-80%).

This means that the majority of components, especially high-value-added components such as engines, gearboxes, electronic systems… still have to be imported, making domestically produced cars more expensive and less competitive with imported cars.

So, Why is Vietnam’s Automotive Localization Rate Still Low?

There are many reasons leading to this situation, including:

• Weak supporting industry: This is one of the main reasons why Vietnam’s automotive localization rate has not yet “taken off”. Domestic enterprises lack capital, technology, and management capacity… to produce high-quality components and parts that meet the requirements of automobile assembly companies.
• Narrow domestic market: The Vietnamese automobile market has potential but is still small in scale. Meanwhile, consumers’ preference for imported cars is also a major barrier, making businesses hesitant to invest in domestic production.
• Inconsistent support policies: Although the Government has issued many policies to encourage the development of the automobile industry, the implementation has faced many shortcomings and has not created a strong enough motivation for businesses.

The Importance of Increasing Vietnam’s Automotive Localization Rate

Increasing the automotive localization rate is not merely about increasing the proportion of domestically produced components, but it also carries significant implications for the country’s socio-economic development.

• Promoting the development of supporting industries: Increasing the localization rate will create motivation for domestic enterprises to invest in the production of components and parts, thereby contributing to the formation of a domestic supply chain and promoting the development of supporting industries.

Auto Parts

• Creating jobs and increasing income for workers: The automotive industry is a labor-intensive industry. When the automotive industry develops, it will create more jobs and increase income for workers.
• Reducing product costs: Domestic production of components and parts will help reduce transportation and logistics costs… thereby reducing product prices and increasing the competitiveness of domestically produced cars.
• Enhancing the position of Vietnam’s automotive industry: Increasing the localization rate will help Vietnam’s automotive industry gradually assert its position in the international market and participate in the global value chain.

Frequently Asked Questions about Vietnam’s Automotive Localization Rate

1. What is the target for Vietnam’s automotive localization rate by 2030?

According to the Strategy for Development of Vietnam’s Automobile Industry to 2025, with a vision to 2035, the target by 2030 is for the localization rate of passenger cars to reach over 45% and for trucks to reach over 65%.

2. How to increase Vietnam’s automotive localization rate?

To increase the localization rate, there needs to be joint efforts from the State, businesses, and consumers. The State needs to improve policies and create a favorable environment for businesses to invest in production. Businesses need to proactively innovate technology and enhance their competitiveness. Consumers should prioritize using domestic products.

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Need More Support Regarding Trucks?

If you have any further questions about Vietnam’s automotive localization rate or need advice on truck models, don’t hesitate to contact us! The experienced team at XE TẢI HÀ NỘI is always ready to assist you 24/7. Hotline: 0968 239 999.

Conclusion

The automotive localization rate is one of the important factors determining the sustainable development of Vietnam’s automotive industry. Hopefully, with the above sharing, you have a better understanding of the importance of this issue. Let’s join hands to contribute to the development of Vietnam’s automotive industry!

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