Several new names have been emerging in the local automobile industry, none of them are state owned corporations, on which the government has been put high hopes.

Two years after the State opens the door of the automobile industry to all investors in all economic sectors, Vietnam has witnessed the establishment of 41 automobile enterprises, both private and state owned. However, only two of them have seen strong development, including Xuan Kien Private Enterprise, which produces Vinaxuki brand vehicles, and Chu Lai – Truong Hai Automobile Company (Thaco).

After setting up the first workshop in Chu Lai Economic Zone, Thaco is going ahead with its project to set up the second workshop, also in Chu Lai EZ, which will specialise in making car parts. The company strives to raise the ratio of locally made car parts as much as possible and as soon as possible. Meanwhile, Vinaxuki has also been planning to raise the locally made content in its products for the last three years.

Both Vinaxuki and Thaco have witnessed the strong and sustainable growth rates over the last years. The total number of vehicles sold by the two manufacturers has accounted for 30% of the total sales by 41 domestic automobile manufacturers. The two companies have the total investment capital of VND300bil ($18.75mil) for each.

Meanwhile, state owned corporations, on which the State has put high hopes, still cannot find the right way for them.

Vinamotor, the Vietnam Automobile Corporation, has many subsidiaries, which have the same production lines. However, the production lines are simple which cannot make the company’s products competitive, especially when Vietnam adjusts its tax policies on imported sets of car parts.

Samco, the HCM City Transport Mechanics Company, now produces buses and consumes the products it makes as it specialises in providing transport services as well. However, in the market, Samco’s products have to compete fiercely with buses manufactured by Thaco and Vinaxuki. Meanwhile, Thaco has successfully gained big contracts on supplying buses to enterprises and transport cooperatives.

The plan of the Coal and Mineral Resources Group on building a VND5tril automobile complex has been fallen into oblivion. The land plot of several tens hectares, which was allocated for the automobile workshop project, has been given to another investor. It is expected that the workshop on producing floating glass will be located on this land area.

The high hopes have also been put on the Vietnam Engine & Agricultural Machinery Corporation’s (VEAM) project, which plans to produce vehicles with the production line imported from the Republic of Korea’s Samsung group. VEAM plans to launch the first vehicles in the second quarter of 2007, but it is highly probable that the plan must be delayed until the end of the year.

It is still early to say about the consumption level of VEAM’s products, however, experts said that as the late comer, it will be very difficult for VEAM to find customers, especially when it does not have advantages in trading with a wide distribution network.

Source: Dau tu