Hanoi (VNA) - The averageincome per capita in Vietnam will reach about 3,000 USD in 2020 and the demandfor cars will boom, according to the Ministry of Industry and Trade’s (MoIT) forecastpresented at a seminar in Hanoi on October 12.

At the seminar, in the presence ofGovernment officials and representatives of the Vietnam AutomobileManufacturers’ Association (VAMA) and 200 businesses, MoIT said domestic autodemand could reach more than 600,000 units a year by 2025. At this scale, themarket would be able to attract resources for sustainable development.

Meeting the market demand, especiallyfor cars with up to nine seats, would help the country reduce its importturnover by 3-7 billion USD in 2025, and about 5-12 billion USD in 2030,contributing to the balance of trade and macroeconomic stability, said theministry.

Deputy Minister Do Thang Hai said theindustry had achieved remarkable results with total assembling andmanufacturing capacity of 460,000 vehicles per year, including light trucks andpassenger cars, meeting the goals it set. The industry had contributedtrillions of VND to the State budget per year and generatedhundreds of thousands of jobs.

🐻[Bumpy time for automobile market, smooth sale for used cars]

"However, localisation rates [thepercentage of locally-made components used to assemble a car] are still low.The part suppliers’ production does not meet the automobile manufacturers’demand,” said Hai. "The auxiliary industries have not yet formed networksof large-scale auto part and material suppliers and there is no connectionamong automakers and local part suppliers," said Hai.

In the context of globalisation, thelocal automobile industry is facing many opportunities and advantages, but alsodifficulties and fierce competition. Starting next year, the import tariff onvehicles from ASEAN states will be zeroed out if the localisation rate reaches40 percent or higher.

President of VAMA Toru Kinoshita saidpolicies need to focus on maintaining the market’s stable growth, reducethe imbalance of production costs between locally-assembled vehicles andimported ones in line with Vietnam’s international commitments, and promotingdevelopment of part suppliers such as training programmes and preferentialinvestment policies.

Market capacity and production outputwill be crucial factors in the success of the auto industry, said Toru Kinoshita.

“To promote the development ofsupporting industries, thereby increasing the localisation ratio, the ministrywill encourage businesses to invest in large-scale electric vehicles for localdemand and export,” said Hai.-VNA