The development of Viet Nam’s automobile industry depends a great deal on its supporting industry, which needs to be developed comprehensively. — VNA/VNS Photo

The development of Viet Nam’s automobile industry depends a great deal on its supporting industry, which needs to be developed comprehensively, experts have said.

Speaking at a conference in HCM City on Thursday, Pham Tuan Anh, deputy director of the Ministry of Industry and Trade’s industrial department, said there are only around 300 manufacturers of car components out of the 12,000 supporting industry companies in Viet Nam.

Around 90 per cent of the 300 are foreign businesses, he said.

In the case of large vehicles, they are able to meet around 55 per cent of the component demand, but manufacturers of smaller cars have to rely heavily on part imports since they can only source around 10 per cent locally, he said.

The domestic companies mostly make simple components such as doors, wheels and wires, yet they are modest in terms of quality and variety and use inefficient machinery and production techniques, he said.

With their production size often being small, their prices are not very competitive either and so car manufacturers usually opt to buy from foreign-owned companies or import, he said.

Since the demand for vehicles in Viet Nam is still relatively low, large international components makers are not interested in investing in the country, he said.

Dr Truong Thi Chi Binh, director of the Supporting Industry Enterprises Development Centre, said with components costing more in Viet Nam, the cost of manufacturing vehicles is higher here than in most other ASEAN member countries.

The industry aims by 2020 to meet 35 per cent of local demand and achieve exports of US$4 billion. By 2035 it hopes to increase them to 65 per cent and $10 billion.

The speakers at the conference said the Government should focus on supporting these companies, help them invest in better technologies, provide more training and encourage them to acquire international quality certificates.

It should also help component and auto manufacturers link up and form partnerships, they said.

“The supporting industry is very important for the development of the automobile industry, and there is a lot more that the Government can do to facilitate their growth,” Phan Dang Tuat of the Ministry of Industry and Trade said. — VNS