Automotive industry includes manufacturing, assembling, distributing and providing services related to automobiles. The development of the automobile industry is important to the Vietnamese economy, contributing to promoting GDP growth, creating jobs and attracting investment.
According to data from the Vietnam Automobile Manufacturers Association (VAMA), in 2020, the auto industry contributed about 3% of GDP and created jobs for more than 200.000 workers.
The history of Vietnam's automobile industry has gone through three main stages: the premise stage (before 1955), the formation stage (1955-1990) and the development stage (from 1991 to present). Each stage has its own characteristics and challenges, creating a diverse and vibrant picture of this industry.
The birth of Decree 53 in 1991, the entry of foreign car manufacturers and the rise of VinFast are important milestones marking the development of the Vietnamese automobile industry.
To learn more about History of the automobile industry, let's explore through the following article!
Before 1955, Vietnam was still under French colonial rule, and the economy was mainly based on agriculture. Cars first appeared in Vietnam in the early 20th century, but mainly served the elite and the colonial government.
According to historical documents, the first car was brought into Vietnam in 1901, owned by Governor General of Indochina Paul Doumer. However, it was not until 1929 that the first automobile transport company appeared in Vietnam called "Northern Transport Company" (Société des Transports Automobiles du Tonkin).
During this period, the number of cars in Vietnam was very limited. According to statistics, in 1934, there were only about 2.000 cars in the whole country, most of them concentrated in big cities like Hanoi, Hai Phong, and Saigon.
In 1936, the French car company Citroën established a car factory at the corner of Le Thanh Tong - Nguyen Hue streets (Saigon), later named "Saigon Car Company".
During the period 1955-1990, Vietnam's automobile industry achieved certain achievements, laying the foundation for development in the next stages. However, the automobile industry still faces many difficulties and challenges due to outdated technology levels, small production scale and limited domestic market.
In 1955, Vietnam began manufacturing and assembling cars with the establishment of the first automobile factory in Hanoi. This is an important milestone marking the beginning of the country's automobile industry. Specifically, in the late 50s and early 60s, Citroën launched the 2CV, Citroën Dyane 6 and Méhari models.
In the 1960s and 1970s, a number of state-owned automobile enterprises were established such as Cuu Long Automobile Company (1964), Vietnam Automobile Company (Vinamotor) (1965). These businesses play a pioneering role in building and developing Vietnam's automobile industry. Also at this time, Citroën launched the La Dalat car model - a Vietnamese car model, practical and cheap.
Vietnam cooperates with socialist countries such as the Soviet Union, Czechoslovakia, and China in the production and assembly of cars. Some typical car models during this period include GAZ-69, UAZ-469 (Soviet Union), Skoda (Czechoslovakia), Dongfeng (China).
In the early stages, the Vietnamese automobile industry faces the following challenges:
The period 1991-2010 marked the strong development of Vietnam's automobile industry. Automobile output grew rapidly, from 3.500 vehicles in 1992 to 100.000 vehicles in 2010. The localization rate also improved significantly, from less than 10% in 1991 to about 40% in 2010.
However, Vietnam's automobile industry still faces many challenges such as small market size, limited competitiveness and dependence on imported components.
Vietnam implements an open-door policy, integrates into the international economy and attracts foreign investment. The Foreign Investment Law was promulgated in 1987, creating a favorable legal corridor for investors around the world.
The 1999 Enterprise Law and the 2005 Law amending and supplementing a number of articles of the Enterprise Law have created impetus for the development of the private economic sector.
In 1991, the Government issued Decree 53/CP on automobile industry development, setting the goal of turning the automobile industry into a key industry. This Decree has laid the foundation for the development of Vietnam's automobile industry in the new period.
Incentive policies on tax, credit and investment are applied to encourage the development of the automobile industry. For example, in 1994, the Government issued Decree 82/CP on encouraging investment in automobile production and assembly, providing incentives for import tax on components, special consumption tax, and corporate income tax. Karma.
The Government approves the automobile industry development plan, determines development goals and directions. Decision 175/2002/QD-TTg approving the Vietnam automobile industry development plan to 2010, vision to 2020, setting a target that by 2010, automobile output will reach 80.000-100.000 vehicles/year, a rate Localization reaches 40-45%.
Many world-famous car manufacturers such as Toyota, Ford, Honda, Hyundai entered the Vietnamese market through joint ventures and cooperation with domestic enterprises.
Automobile manufacturing and assembly factories were built, improving the production capacity of the Vietnamese automobile industry. For example, in 1995, the joint venture VMC (Vietnam Motor Corporation) between Vietnam Automobile Company and Suzuki Corporation (Japan) officially inaugurated the first automobile assembly plant in Vietnam with a capacity of 5.000 vehicles/car. year.
The demand for personal car ownership increases with increasing income and urbanization. The car ownership rate increased from 1,2 cars/1.000 people in 1990 to 8,7 cars/1.000 people in 2010.
The first automobile assembly joint ventures in Vietnam were born such as:
The dealer, showroom and after-sales service system has been expanded, making it easier for consumers to access and use cars. In 2010, the country had about 400 car dealers of all types.
The Government has introduced policies to support the development of supporting industries to increase the localization rate in automobile production. Decision 34/2007/QD-BCN approving the Planning for development of supporting industries for the automobile industry until 2010, with a vision to 2020.
Automobile businesses focus on cooperating with domestic and foreign suppliers to improve the production capacity of components and spare parts. For example, in 2008, Toyota Vietnam cooperated with 13 domestic suppliers to produce car seats, increasing Toyota Innova's localization rate to 37%.
The period 2011-2020 witnessed the outstanding development of the Vietnamese automobile industry with many important milestones such as the birth of VinFast, the strong growth of the domestic market and the trend of eco-friendly car production. with the environment.
However, the Covid-19 pandemic also poses many challenges for the auto industry during this period, requiring flexibility and adaptability from businesses.
In 2017, VinFast - the first Vietnamese automobile brand was born, marking an important milestone in the history of the country's automobile industry. VinFast is part of Vingroup - the largest private economic group in Vietnam.
VinFast invests heavily in research and development, building a modern manufacturing plant with advanced technology. VinFast automobile factory in Hai Phong has a scale of 500.000 vehicles/year, invested 3,5 billion USD, using modern technology and equipment from Germany, Japan, and Korea.
VinFast products such as VinFast Fadil, VinFast LUX A2.0, VinFast LUX SA2.0 quickly dominate the domestic market and aim for export. In 2020, VinFast achieved sales of 29.485 vehicles, accounting for 13% of Vietnam's automobile market share.
Thaco - Vietnam's leading automobile manufacturing group continues to expand its scale and diversify its products, improving competitiveness. In 2020, Thaco achieved sales of 80.519 vehicles, accounting for 35,5% of Vietnam's automobile market share.
The trend of using electric and hybrid cars is increasingly popular, requiring the Vietnamese automobile industry to innovate and adapt. The government targets that by 2030, electric cars will account for 30% of Vietnam's automobile output.
Automobile businesses invest in research and development of electric and hybrid vehicle models with the goal of reducing greenhouse gas emissions and protecting the environment. VinFast aims to become a global smart electric car company, launching three electric car models: VF e34, VF e35, VF e36 with a range of up to 500 km per charge.
The government offers support policies and incentives to encourage the production and use of electric and hybrid cars. For example, electric cars are exempt from special consumption tax and have a 50% reduction in registration fees; Hybrid cars enjoy a 50% special consumption tax reduction.
Vietnam actively participates in free trade agreements (FTAs) such as CPTPP, EVFTA, RCEP... opening up opportunities to export cars and components. In 2020, Vietnam's export turnover of cars and components reached 6,9 billion USD, an increase of 48,3% compared to 2016.
Vietnamese automobile enterprises strive to improve production capacity and meet international standards to participate deeply in the global automobile supply chain. For example, VinFast Manufacturing & Trading Co., Ltd. has become a supplier of components for famous car manufacturers such as BMW, Audi, Mercedes-Benz.
The Covid-19 pandemic broke out in early 2020, severely affecting the Vietnamese automobile industry, disrupting production and supply chains. Vietnam's automobile output in 2020 decreased by 12,6% compared to 2019.
Car sales dropped sharply in 2020, many businesses encountered financial difficulties and had to cut staff. Vietnam's car sales in 2020 reached 283.149 vehicles, down 8% compared to 2019.
However, Vietnam's automobile industry quickly adapted and recovered, with the support of the Government and the efforts of businesses. In the first quarter of 2021, Vietnam's automobile output increased by 37,4% over the same period in 2020, reaching 91.916 vehicles.
Some typical car models in the early stages of the Vietnamese automobile industry include GAZ-69, UAZ-469 (Soviet Union), Skoda (Czechoslovakia), Dongfeng (China).
Decree 53/CP on automobile industry development issued in 1991 laid the foundation for the development of Vietnam's automobile industry in the new period.
Many world-famous car manufacturers such as Toyota, Ford, Honda, and Hyundai have entered the Vietnamese market through joint ventures and cooperation with domestic enterprises.
The car ownership rate increased from 1,2 cars/1.000 people in 1990 to 8,7 cars/1.000 people in 2010.
VinFast products such as VinFast Fadil, VinFast LUX A2.0, VinFast LUX SA2.0 quickly dominate the domestic market. In 2020, VinFast achieved sales of 29.485 vehicles, accounting for 13% of Vietnam's automobile market share.
Vietnam aims to apply Euro 5 emission standards in 2022 and Euro 6 in 2027.
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