Supplier shortages irk assemblers

Despite rapid growth in demand for vehicles in recent years, particularly since 2009, Vietnam’s market is still considered relatively small and unstable for car firms to raise investment in production capacities.

In June this year, 16 member companies of the Vietnam Automobile Manufacturers’ Association (VAMA) enjoyed 53 per cent growth in sales of SUV/MPV and crossover vehicles against June last year.

The figure for passenger car  growth was 10 per cent in June, while commercial vehicle sales fell 13 per cent on-year.

VAMA members’ sales of SUV/MPV and crossover vehicles however fell 10 per cent on-year to 10,678 units during January-June. Passenger cars and commercial vehicles, in the meantime, grew respectively 29 per cent to 14,133 units and 2 per cent to 25,467 units year-on-year.

“Our study on additional investment is underway. However, the timing of further investment decisions depends on the market situation and government’s policy,” Toyota Vietnam’s president Akito Tachibana told VIR.

Tachibana said that although Vietnam had potential, it remained less attractive than other regional nations, including Thailand where the market was big and the supporting industry was well developed.

“Thailand is still a production hub for Toyota in ASEAN countries. Thailand is also the global production base for pick-ups,” he said.

Japan External Trade Organization statistics showed that Toyota could sell approximately 30,000 automobiles in Vietnam every year, equal to just 6 per cent of the volume it achieved in Thailand.

Ford Vietnam also confirmed  it had seen no further need to increase its investment in plant and equipment in Vietnam.

“While sales in the first half of 2010 were similar to 2009 level, we are still operating below full production capacity at our plant in Vietnam. Until we fully utilise this capacity there is no requirement for added investment,” said Michael Pease, general director of Ford Vietnam.

The American firm, however, revealed that it would invest several million dollars in new products, technology and localisation in Vietnam this year.

In late June, Ford announced it would invest around $450 million in establishing a new passenger car plant in Thailand, which will have  production capacity of 150,000 units per annum.

Pease said the supply base development and the export orientation were decisive factors in Thailand’s favour.

“Many things need to be prepared from now, especially in Vietnam’s supporting industry and infrastructure development. If Vietnam goes on the right track, local industry can catch up Thailand in the near future,” Tachibana said.

Pease stressed that unless the government had a policy framework that provided a comparative advantage to other countries in the region, it would be challenging for automobile makers to achieve fully competitive localisation in the few short years to AFTA implementation.

Under AFTA which Vietnam is already committed, the import tax for complete built units of vehicles in Vietnam will be abolished in 2018.