Problems Remain with Vietnam’s Car Industry Localization Process

Diep Nguyen

Prices of cars in Vietnam are crazily high, as from the remarks of both Vietnamese and foreigners and the localization rate is very low despite many years of restructuring the industry.

Problems Remain with Vietnam’s Car Industry Localization Process
Photo Courtesy: Reuters
For a long time, cars are considered by Vietnamese to be a symbol of luxury and convenience. The rate of car ownership surged year over year despite traffic congestion because the middle income and high income groups in Vietnam are expanding, thus they want to own cars to show their social status and meet transporing and leisure demands.
But owning a car in Vietnam comes with many headaches and inconveniences. The parking fees are too high compared to the mass’s incomes. Furthermore, there are very few parking spaces especially in the four old quarters. Driving car in big cities is not easy because of many restrictions. Recently, Hanoi authorities stated that they will ban car using in some central streets in central quarters to reduce less traffic congestion.
For many middle income people, they had to resell the cars after some months because they can not burden the very high costs which come along with the car they bought before. Many of them complained that the cost of maintaining the care may consume up to 20% of their total income, which is too costly. 
Prices of cars in Vietnam are crazily high, as from the remarks of both Vietnamese and foreigners. As reported by Xinhua with the information from the Ministry of Industry and Trade, Vietnam's automobile industry has witnessed progress in the last two years, but the localization rate remains low, not meeting the set target.
According to Xinhua, the localization rate for cars with nine seats and fewer has reached about 7-10 percent, concentrating on tires, seats, mirrors, glass, electrics, batteries and plastic products. Meanwhile, the Vietnamese government's target was set at 40 percent in 2005 and 60 percent in 2010, local daily newspaper Vietnam News on Thursday quoted the ministry's report sent to Vietnam's top legislature for discussion and direction as saying.
Up to 80-90 percent of main raw materials for production of automobile components such as alloy steel, aluminum alloy, plastic beads and hi-tech rubber are currently imported.
According to the Vietnam Automobile Manufacturers' Association, more than 288,600 automobiles were sold in the Vietnamese market in 2018, up nearly 6 percent from 2017. Specifically, the sale of locally-assembled automobiles rose 11 percent, and that of imported vehicles dropped over 6 percent.