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An analysis by China Research Institute (CRI), based on data provided by the Southern Automobile Manufacturers Association (VAMA), indicates that VAMA member units experienced a substantial increase in vehicle sales during 2022. The total number of vehicles sold reached 404,600 units, representing a notable 33% growth compared to the previous year, 2021.
Vietnam’s auto market is poised for significant growth in the coming years, according to a forecast by the China Automotive Technology and Research Center (CATARC). The market is expected to reach sales of 700,000 to 800,000 units annually by 2025 and surpass 1 million units by 2030. This growth is driven by the expanding scale of the auto market in Vietnam, which is creating opportunities for the development of the auto parts industry.
To ensure the reliable supply of spare parts and enhance the localization rate of vehicles, several major domestic enterprises in Vietnam have taken proactive steps to increase their investments in the automotive auxiliary industry. Notably, many overseas manufacturers have also relocated their auto parts operations to Vietnam, further contributing to the growth of the country’s automotive sector.
Chinese electric vehicle manufacturer BYD plans to establish an auto parts factory in Vietnam, representing an investment of over USD 250 million. Construction is anticipated to commence before mid-2023, with the Vietnamese factory serving as an export hub for components destined for BYD’s assembly plant in Thailand.
Overall, Vietnam’s auto parts industry has sustained a trade surplus in recent years, with exports outpacing imports. This trade surplus has exhibited a relatively stable growth trend, averaging a compound annual growth rate (CAGR) of 3.18% from 2018 to 2022. In 2022, the industry’s trade surplus reached $160 million, representing a 9.92% decline compared to the previous year.
Impact of COVID-19 on Vietnam’s Automotive Production
The COVID-19 pandemic has significantly impacted Vietnam’s automotive production. According to China Research and Intelligence (CRI), Vietnam’s auto production in 2020 declined by 31.55% year-over-year to only 249,000 units.
Despite this setback, the compound annual growth rate (CAGR) of Vietnam’s auto production from 2018 to 2022 was a robust 14.04%. In 2022, as the impact of COVID-19 gradually subsided and the domestic and global markets began to recover economically, Vietnam’s automotive production rebounded strongly. The annual production in 2022 reached approximately 440,000 units, representing a 46.65% year-on-year increase.
This surge in automobile production in Vietnam has driven up demand for auto parts, creating significant opportunities for suppliers in the automotive industry.
In terms of passenger car ownership, according to CRI’s analysis, Vietnam will have 29 cars per 1,000 people in 2022, up 9.74% y-o-y. The CAGR of passenger car ownership in Vietnam is 12.18% from 2018-2022, with 19 cars per 1,000 people in 2018 and 29 cars by 2022. The rising passenger car ownership in Vietnam is driving up the demand for automotive parts.
According to the analysis of CRI, by the end of 2020, the total number of enterprises of wholesale, retail and repair of motor vehicles and motorcycles in Vietnam was 639 and the total number of automobile manufacturing enterprises was 14,404. Vietnam’s automobile industry is relatively fragmented and most of the enterprises in the industry are small and medium-sized enterprises with small capital scale.
74 enterprises in the wholesale, retail and repair of motor vehicles and motorcycles with capital scale over VND500 billion, accounting for only 0.51% of the total. There are 83 automobile manufacturing enterprises with capital scale over VND500 billion, accounting for only 12.99% of the total.
Full report: Vietnam Auto Parts Industry Research Report 2023-2032