Recent economic developments in Vietnam have enabled more consumers to purchase cars. What was once considered a substantial investment has become a more attainable goal for many Vietnamese people. In the last five years, Vietnam’s automotive market became one of the fastest-growing in Southeast Asia, and it shows no signs of slowing down.
Despite the effects of the COVID-19 pandemic on automobile sales in the past two years, the automotive outlook in Vietnam remains bright. The passenger vehicle segment, especially, is projected to grow in the coming years.
The market continues to expand and the more these automakers invest in technology and talent, the more they can keep up with the increasing demands even outside Vietnam.
What can we expect from Vietnam’s growing automotive market size and what opportunities await those looking to dabble in this market in the coming years?
Vietnam is known to be the country of scooters, but in the last five years, the passenger cars market has seen a steady increase. The largest segment is large SUVs, with a projected market value of $1.3 billion this year. The passenger cars market is expected to generate $6.3 billion in revenue in 2022.
Some of the biggest automobile brands in the world have manufacturing plants in Vietnam, both for assembling kits and producing specific car models. Global brands Toyota, Nissan, and Kia lead the market, and foreign-owned car parts manufacturers in Vietnam also contribute millions of dollars to the car parts export revenue of the country.
Automobile manufacturers with operations in Vietnam are looking to expand their factories in the country to combat the high costs of importing parts. The increase in investments from these companies has boosted local production of vehicles and will continue to add to Vietnam’s automotive market size in the coming years.
Electric vehicles (EVs) are now the focus of Vietnam’s automotive market growth. VinFast, the leading local automaker in Vietnam, has announced its plan to build a $2 billion electric vehicle and battery plant in North Carolina in the United States. They have also opened pre-orders for two electric SUVs in the country, where they have already rolled out two EV models.
In YCP Solidiance’s recent white paper, “Public and Private Sector Cooperation: Sustainable Development in Vietnam,” it is outlined that finding a sustainable yet cost-effective solution to transport issues is one of the biggest hurdles in the transportation sector. EVs are 45% more expensive than petroleum-fueled cars, but they can become cheaper with the developing technology that makes EV batteries better.
For VinFast to grow in its home market, the Vietnamese government needs to support the EV market. Developing infrastructure for EVs as well as providing support for EV purchases will help increase the market size for EVs in Vietnam.
The government already shared two transportation goals: the production of 250,000 EV units annually and the building of 20,000 additional charging stations to encourage the use of EVs. These public-private partnerships will enable not only the growth of the automotive industry in Vietnam but also help the country work towards sustainable development.