3:26:42 PM | 7/8/2005
The Ministry of Industry (MoI) has asked provincial and municipal departments of industry across Vietnam to be cautious while granting permission for future projects in automobile assembly and production.
MoI said caution is especially needed in provinces and cities encouraging investment in automobile assembly.
MoI discovered that the authorized local offices found it very difficult to manage enterprises’ business activities, particularly with regard to product quality. This could seriously impact on the country’s automotive industry and consumers as well, the ministry said.
According to MoI’s study, the majority of enterprises who submitted applications for licenses for automobile projects were unfeasible due to modest capital, low technology and small scale manufacturing with capacities between 3,000 and 5,000 cars per year.
Many enterprises already involved in welding, painting, assembly and simple technical checks of automobiles, which mainly come from China, are not able to qualify their work to the standard the automobile industry has set out in its planning strategy.
Under the Vietnam’s automobile industry development strategy to 2010, recently ratified by the Prime Minister, the domestic market will only require 113,000 automobiles by 2010 but the total production output capacity proposed by existing enterprises will hit 120,000 units per year.
Vietnam now has about 200 enterprises engaged in the manufacture, assembly and repair of automobiles, of which the State sector owns four giant enterprises Vinamotor, VEAM, Vinacoal and Samco.
However, the State-owned auto enterprises mainly import parts for assembly, with their products being trucks, buses and vehicles for special purposes.
According to experts, the number of enterprises will reduce in the future, citing that 10 years ago Vietnam had around 100 motorbike production bases with annual outputs of three million units, but currently about 10 enterprises are able to survive.
Vietnam is now home to 13 foreign-led production firms including Toyota, Mercedes-Benz, Ford, Isuzu and newly licensed Honda and VMEP. With strong financial resources, foreign-invested carmakers are dominating the Vietnamese auto industry.
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