With Vietnam’s rapidly growing transportation demands, experts point out that the Vietnamese automotive and motorcycle manufacturing and trade market shows enormous potential. The automotive industry has achieved positive results against the backdrop of new policy implementation and enterprises actively expanding factories and assembly lines while gradually keeping pace with global development trends.

Notably, the localization rate is steadily increasing as more companies invest in domestic automobile production. New government policies and increasingly clear foreign investment flows paint a brighter picture for Vietnam’s automotive and motorcycle supporting industries.

According to Ministry of Industry and Trade data, last year’s wire harness exports reached approximately $1.17 billion, accounting for 38% of total auto parts exports, ranking third globally. Vietnamese-manufactured wire products have become an important link in the global automotive assembly materials supply chain.

Dr. Truong Thi Chi Binh, Vice Secretary General of the Vietnam Association of Supporting Industries (VASI), noted that the total value of automotive industry-related products has grown rapidly, rising from 12% growth in 2018 to 25% last year. She added that to increase product value, enterprises are transitioning from producing individual spare parts to component clusters, and from Original Equipment Manufacturer (OEM) to Original Brand Manufacturer (OBM) models.

Nguyen Cong Quyet, representative of the Vietnam Automobile Manufacturers’ Association (VAMA), told “Construction News” that Vietnam’s automotive market shows enormous potential thanks to its population of 100 million and rising per capita income. However, he pointed out that the supporting industry remains in its early maintenance stage, with enterprises primarily producing low-value and uncompetitive components.

A key issue is the relatively small automotive market size, resulting in low production volumes and difficult supply chain development. Regarding global automotive industry supply chain development in the context of climate change, the VAMA representative noted that producing and assembling a complete vehicle requires approximately 30,000 components, thus requiring a strong industrial foundation.

Dr. Truong Thi Chi Binh stated that Vietnamese auto parts production is divided into two branches: high-value activities conducted by foreign enterprises and major local brands, and low-value activities concentrated among SMEs. Many enterprises are trapped in a “low productivity trap,” necessitating comprehensive industry transformation from objectives to processes to personnel.

The VAMA representative indicated that the business community anticipates a synchronized and breakthrough incentive policy package to promote green automobile production and assembly investment. He emphasized that these policies must encourage and mobilize participation from domestic economic sectors, promote cooperation with major global automobile manufacturers, and focus on improving enterprise competitiveness to enable participation in global automotive industry production chains.

Key Points:

• Vietnam’s auto parts industry develops rapidly, with wire harness exports ranking third globally.
• Automotive industry-related product value growth significant, rising from 12% in 2018 to 25% last year.
• Enterprises transitioning from individual spare parts to component cluster production.
• Small market size remains a major constraint on industry development.
• Industry shows polarization between foreign and domestic enterprises.
• Businesses await government incentive policies supporting green automotive development.
• Industry faces comprehensive transformation needs, including objectives, processes, and personnel.
• Improving competitiveness and integration into global supply chains become industry development priorities.