Auto companies seek to expand Vietnam production

By Dat Nguyen January 18, 2020 | 08:23 pm PT

Vehicles in traffic jam in Hanoi on January 16, 2019. Photo by VnExpress/Ngoc Thanh.

Auto manufacturers are expanding factories in Vietnam to increase output as the country seeks to reduce its reliance on imports.

On January 14 U.S. company Ford announced plans to invest $82 million in expanding its plant in northern Vietnam to triple capacity from 14,000 to 40,000 vehicles a year.

The money, which will take its total investment in Vietnam to more than $200 million, will come in two stages over a two-year period starting this year. Ford saw sales rise by 31 percent last year to 32,175 units.

Ford only sells three locally made models of the crossover SUV EcoSport and passenger vans Transit and Tourneo.

Their sales reached 8,941 units last year, far below the 14,000 capacity of the company’s plant in Hai Duong Province.

Following the expansion, the factory will produce more models locally, including the compact crossover Escape, starting in the second quarter of this year.

Vietnam is seeking to reduce imports to boost local production.

In 2018 Toyota rented an additional 9.1 hectares of land to expand its factory. Honda has also proposed to increase its plant capacity, while Mitsubishi plans a second plant in the country in central Nghe An Province in addition to its existing one in Binh Duong Province near HCMC.

Vietnamese manufacturer Thanh Cong Motor (TC Motor) has signed an agreement with South Korea’s Hyundai to build a second plant in northern Quang Ninh Province after the first in northern Ninh Binh Province.

Truong Hai Auto built a KIA assembly plant in September last year following earlier lines for Peugeot earlier the same year and Mazda in 2018.

VinFast completed the first phase of its auto plant in the northern Hai Phong City in June last year with a capacity of 250,000 units a year.

While sales of locally made vehicles still remain higher than that of imports, the latter is surging. Last year sales of the former fell 12 percent year-on-year to 189,450 units while sales of imported vehicles surged 82 percent to 132,872 according to the Vietnam Automobile Manufacturers Association.

Vietnam imported 140,301 vehicles last year, up 69.3 percent year-on-year, according to the customs.