Vietnam: Automakers and Assembly Companies Plan to Increase Production Capacity

In Vietnam, automakers and local assembly companies have been actively investing to increase production capacity in recent years. At first, many automakers started expanding a lineup of imported cars and narrowing down a list of models to manufacture locally in response to the deregulation issued in January 2018, in which import tariffs on completely built units (CBUs) built in ASEAN region are abolished. However, against the backdrop of increasing government localization demands and expectations for long-term market growth, automakers and assembly companies have shifted toward adding more local production models. Thus, investing in capacity expansion has become a trend in Vietnam. Truong Hai Auto Corporation (Thaco), the largest local automobile assembly company, increased the annual production capacity of the Kia brand plant from 20,000 to 50,000 units in September 2019. It also plans to start assembling M-Benz buses in the second half of 2020. Major automakers are also taking the same step. Toyota increased the production capacity from 59,000 to 70,000 units in 2019. Ford is planning to increase the capacity from 14,000 to 40,000 units by 2022, while Kia plans to start operating the 2nd factory in the second half of 2020 to increase the capacity up to 100,000 units.