The total number of cars sold in the market by 2030 could reach 1-1.1 million units, double the record level of 2022.
In the draft Strategy for the Development of Vietnam's Automotive Industry until 2030, the Ministry of Industry and Trade stated that the target for total car sales is approximately 1-1.1 million vehicles, with an average annual growth rate of 14-16%. Of these, electric, hybrid, and solar-powered vehicles are expected to account for 350,000 units by 2030.
By 2045, this market could grow by 11-12% annually, with a total of 5-5.7 million vehicles. Of these, electric vehicles, using clean energy, will account for 80-85% of the market share, equivalent to 4.3-4.4 million vehicles. Domestic vehicle assembly will reach approximately 4-4.6 million units, meeting 80-85% of domestic demand.
Consumption targets for 2030 are projected to be approximately 2.5 times the figures recorded at the end of 2023. The Ministry of Industry and Trade, citing a report from the National Traffic Safety Committee, stated that in 2023, over 408,500 new vehicles were registered nationwide. The cumulative total of registered vehicles by the end of the year was 6.31 million.
This figure is also double the record sales volume in 2022, exceeding 500,000 vehicles, placing Vietnam among the top four largest markets in Southeast Asia. At that time, sales of half a million vehicles in the region were previously only achieved by the three largest markets: Thailand, Indonesia, and Malaysia. Simultaneously, Vietnam's automotive market growth is the second highest in the region, after Malaysia.
According to the Ministry of Industry and Trade, the Vietnamese automobile market has continuously grown since 2011. Currently, the average car ownership per capita is 63 vehicles per 1,000 people in 2023. If only passenger cars with fewer than 9 seats are considered, the car ownership rate is 30 vehicles per 1,000 people. Vehicles owned by individuals, families, and organizations account for 67% of the total number of cars in circulation nationwide, according to the regulatory agency.
In developing this strategy, authorities also aim to increase the proportion of domestically assembled vehicles to approximately 70% of domestic demand by 2030, and to 87% by 2045. Currently, the proportion of completely built-up (CBU) imported vehicles remains quite large, at over 40%, according to data from the General Department of Customs and VAMA.
Simultaneously, Vietnam aims to boost its supporting industries. Specifically, by 2030, the supporting industry for automobile production will meet approximately 55-60% of the demand for components and parts for domestic assembly, increasing to 80-85% by 2045.
The supporting industries will increase the application of technology to manufacture critical parts and components such as transmissions, gearboxes, engines, and vehicle bodies. They must also increase cooperation with major automakers, selecting parts and components that can be produced domestically to assume a role as a link in the global production and supply chain.
Currently, there are approximately 30,000 mechanical engineering enterprises nationwide, accounting for nearly 30% of the total number of manufacturing and processing enterprises. However, according to the Ministry of Industry and Trade, the quality of human resources in the mechanical engineering sector does not yet meet the needs of operating high-tech equipment. This is one of the important issues affecting production and economic efficiency in the mechanical processing industry.
Meanwhile, domestically produced components are mainly bulky, simple, labor-intensive, and inexpensive parts such as chairs, batteries, and large-sized plastics. The majority of components requiring high levels of expertise and technical skill must be imported. Domestic businesses also lack the ability to produce complex component assemblies.
Car parts are primarily made of iron and steel, a material Vietnam is still not self-sufficient in. In particular, parts subjected to high stress and heat, such as engines, gearboxes, and crankshafts, must be made from gray cast iron, ductile cast iron, spheroidal cast iron, or aluminum alloys, all of which Vietnam still has to import.
Typically, the automotive industry value chain is divided into two parts. The downstream stage includes design and the production of primary and secondary components and parts. This stage accounts for nearly 60% of the value of a finished vehicle, but domestic automotive companies are completely passive in this process.
The upstream segment, including assembly, distribution, sales, and customer service, only contributes about 15% of the total vehicle value. This is precisely the segment that Vietnamese businesses are currently involved in.
Thailand currently has 710 Tier 1 suppliers and 1,700 Tier 2 units serving the automotive manufacturing industry. However, Vietnam only has about 33 Tier 1 suppliers and around 200 Tier 2 suppliers. Furthermore, Vietnam lacks even a single major, well-known supplier specializing in products and services for this industry.
"To create good automotive products, we need good materials for manufacturing and high capabilities in manufacturing, robot programming, and quality control," the Ministry of Industry and Trade assessed, stating that this is an area that needs improvement. In reality, the Vietnamese automotive industry has a foothold in the market but has yet to build high levels of trust, even among domestic consumers.
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