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Automobile joint ventures return to to car assembling

After a period of focusing on importing cars to sell domestically, foreign invested automobile manufacturers have returned to their initial work – assembling cars domestically.

Investors scale up production
Investors scale up production

Investors scale up production

The domestic automobile market has witnessed many big changes this year as new policies took effect. However, some enterprises still believe in the great potential of the market and make investments in Vietnam.

TCIE Vietnam (TCIEV), which makes Nissan branded cars, is an example. TCIEV’s CEO Lee Jiunn Shyan affirmed that the company is planning to scale up its production in Vietnam.

TCIEV now has a factory in Da Nang City with investment capital of $100 million which assembles two models – Nissan Sunny and Nissan X-Trail. Though the factory is running at full capacity (500 products a month), its products are not enough to be delivered to customers.

Tan Chong Motor Holdings Berhard in Malaysia, the holding company of TCIEV is planning to pour another $20 million to the factory in 2019 which would allow the factory to assemble more Nissan models.

Mitsubishi Motor is also considering expanding its operation in Vietnam. The group’s vice president Kozo Shiraji earlier this year said the group was considering the plan to set up the second factory in Vietnam. Capitalized at $250 million, the 50,000 product per annum factory is expected to become operational in mid-2020.

Explaining the decision to strengthen investments in Vietnam, Lee said the Vietnamese market is undergoing ups and downs, but it really has great potential.

The production cost in Vietnam is still higher than that in Thailand and Indonesia, but things will be different once the market capacity gets larger.

He stressed that in Vietnam, the ‘soft’ costs such as the labor force, electricity and water are competitive if compared with other regional countries.

Hyundai Thanh Cong, a joint venture with a partner from South Korea, is also planning to increase its investment in Vietnam. A senior executive of Hyundai Thanh Cong said the factory in Ninh Binh will not only churn out products for domestic consumption, but for export as well.

Market ups and downs

In the first months of the year, import cars could not enter Vietnam because of new regulations. This gave great opportunities for domestic assemblers to boost sales. The reports of Honda Vietnam, Toyota Vietnam and Suzuki Vietnam all showed a sharp increase in numbers of cars sold in the first eight months of the year.

Toyota Vietnam sold 29,692 cars in the first seven months, an increase of 32 percent over the same period in 2017.

The number of Vietnamese owning cars remains modest – 16 out of every 1,000 people.