VIETNAM AUTOMOBILES AND AUTO PARTS INDUSTRY REPORT TABLE OF CONTENTS 03 54
Executive summary Entry landscape
07 55
Automobiles market overview Domestic auto parts manufacturers
14 69
Auto parts market overview Entry barriers
15 76
Business Environment Collaboration landscape 15 Government policy
27 Trade agreements 82 29 Market features
38 Hai Phong Industrial complex Appendix: Financial statements 43 Quang Ninh Industrial complex
48 Chu Lai Industrial complex
VIETNAM AUTOMOBILES MARKET REPORT 2 보고 요약 핵심 요약 – 1. 베트남 자동차 산업 현황 Automobile production in Vietnam, 2014 – 9M/2020 Thousand units 300.0 120% 산업내 가치사슬 중 부가가치가 가장 낮은 102.8% 100% 1 250.0 단계 영위 중 80% 200.0 60%
150.0 23.7% 40% 완성차 조립의 마지막 부분에 집중 (OEM 20% 2 100.0 0.3% 4.5% 일본 5, 미국 2, 베트남 합작사 3 등) -14.2% 0% 50.0 -20% 126.1 255.8 256.4 219.9 272.0 284.2 181.4 - -40% 2014 2015 2016 2017 2018 2019 9M/20209T/2020
인근국가(태국, 인도네시아) 대비 약2.6배 Production volume Growth 3 Source: VIRAC, VAMA 작은 규모의 완성차 소비 시장 Vietnam automobile consumption, 2014 – 9M/2020 Thousand units 300.0 120% 98.1% 100% 250.0 ‘20년 9개월간 완성차 18.1만대 조립생산 vs 80% 4 200.0 17.5만대 소비 60% 32.4% 150.0 40%
20% 100.0 3.3% 0.8% 0% -17.8% ‘20년 9개월간 수입차 소비 65,074대로 전년 50.0
-20%
246.7 254.8 209.5 277.3 279.5 174.9 5 124.5 동기비 30.5% 감소 - -40% 2014 2015 2016 2017 2018 2019 9M/20209T/2020
Consumption volume Growth Source: VIRAC, VAMA VIETNAM AUTOMOBILES MARKET REPORT 3 보고 요약 핵심 요약 – 2. 베트남 자동차 부품시장 Completed auto parts production volume, 2014 - 9M/2020
Tier 1 : 83개사 (순정부품 제조업체 21개사 포함) Million units 1 12,000 450.1% 500% Tier 2, 3 : 개사, 기타 178개사 138 10,000 400%
300% 8,000 200% 일본 부품업체가 부품제조시장 주도(개사) : 6,000 100% 2 28.3% 베트남(136), 대만(57) 등 4,000 -10.1% -8.0% 일본(177), 0% -86.8% 2,000 -100% 1378.1 7581.0 9729.0 1288.1 1158.2 1065.9 806.9 0 -200% 다수의 기업이 오토바이 부품과 자동차 2014 2015 2016 2017 2018 2019 9M/20209T/2020 3 Production volume Growth 부품의 혼합 생산 Source: VIRAC, GSO Production of components and spare parts, 9M/2020
Other spare parts for motor vehicles 1.37% 1.50% 0.86% 자동차 부품 소비량 : ‘20년 9개월간 부품 8억690만개 2.95% Ignition wire sets and other harnesses 4 used in motor vehicles 3.21% 소비로 동년비 26.3% 감소 Other equipment used by motor vehicles 9.68% Other audio signal equipment
Airbag
현재의 부품생산 현지화율은 낮은 상황 Gear box 5 10%대로 80.42%
Starter-generator
Source: VIRAC, GSO VIETNAM AUTOMOBILES MARKET REPORT 4 보고 요약 핵심 요약 – 3. 산업 발전 가능성 Localization rate of key auto parts OEMs in Vietnam, 2019
Company’s 현대타잉콩, 타코, 빈패스트 등 베트남 Passenger cars Truck Bus Target 1 average 자동차 제조 및 조립 업체 성장 중 35 - 15% - 18% 15 - 18% 60% 60% 45%
35% (Hyundai ~12% 40% 가계소비지출 증가, 베트남 정부의 강력한 Accent) 2 자동차 산업 육성 의지와 우대정책 전개 30% (Honda City) ~25% 40% 15% (Honda CR-V)
~20% 37% (Innova) 45% ‘20년7월부터 베트남내 제조 및 조립된 자동차의 Less than Less than 10% 60% 3 등록비 50% 인하 조치 단행 10% (Fadil)
Average income and spent per month, 2010 – 2019 USD 200 180.8 자동차 소유비율 상승여지 풍부 : 180 166.9 160 133.4 4 (대/1천명) 베트남 16, 인도네시아 55, 태국 196, 140 113.5 116.6 말레이시아 341 120 109.6 92.9 100 86.1 81.3 80 69.0 59.7 60 52.1 베트남 정부와 현지 완성차 제조 및 조립업체들의 40 5 20 강력한 부품현지화율 제고 의지 0 2010 2012 2014 2016 2018 2019
Average Income Spent per month Source: VIRAC, GSO VIETNAM AUTOMOBILES MARKET REPORT 5 보고 요약 핵심 요약 – 4. 우리기업 진출전략 포인트
10여개의 완성차 제조 및 조립공장 위치 감안 : 주로 Vinh Phuc 1 북부(하이퐁-빈패스트, 빈푹-토요타, 혼다, 닌빈& 꽝닌- Ninh Binh 현대 타잉콩)와 중부(꽝남-타코)에 집중 Hai Phong
Da Nang 소규모 분산 제조, 부품 공급업체 부족, 숙련인력 Quang Nam 2 부족으로 인한 높은 제조 비용 감안 필요, 인근국가 대비 생산비용 약20% 고가
Binh Duong Dong Nai 젊은 인력과 저렴한 인건비 활용 가능, 3 베트남 정부의 자동차 산업 육성 의지 강력 Can Tho
Automotive designed capacity in Vietnam
Existing Planned new Expected total 현지업체와의 합작투자를 통한 점진적인 OEMs capacity capacity capacity 4 2019 2020 2025 중기적 진출 전략 Thaco 207 120 327
TC Motor 102 150 252
Honda 10 10 20 베트남내 소비시장 겨냥과 병행한 아세안 5 Toyota 50 20 70 역내 생산거점 구축 전략 동시 구사 VinFast 250 250 500
Total 619 550 1,169 VIETNAM AUTOMOBILES MARKET REPORT 6 Source: VIRAC VIETNAM AUTOMOBILES MARKET OVERVIEW
7 1.1. Automobiles market overview
Thousand units Automobile production in Vietnam, 2014 – 9M/2020 300.0 120% 102.8% 100% 250.0 80% 200.0 60%
150.0 40% 23.7% 20% 4.5% 100.0 0.3% -14.2% 0% 50.0 -20% 126.1 255.8 256.4 219.9 272.0 284.2 181.4 - -40% 2014 2015 2016 2017 2018 2019 9M/20209T/2020
Production volume Growth
Source: VIRAC, GSO
In the first 9 months of 2020, the number of cars produced and assembled nationwide reached 181.4 thousand units, a sharp decrease of 48.7% compared to the same period in 2019. There were many factors affecting volume of domestic car production:
• In the first and second quarters, the effects of the epidemic on the entire production chain already took it toll on Vietnam's imports. Moreover, many large automobile manufacturers in Vietnam such as Ford, Toyota, Honda and TC Motor all had to stop production during March. Though some Thaco facilities are still operating, workers and production chain are still under social distancing. This is the main reason for the significant decline in car production
• Since the end of June, with support from the government by reducing 50% of registration fee compared to previous amount and extending payment term for excise tax, a new door of opportunities has opened for domestic automobile production. According to the Ministry of Industry and Trade, car consumption in 2020 will decrease, but only by 3 - 5% compared to 2019. Therefore, many car manufacturers including FDI enterprises are considering maintaining operation, or even expanding production in the context of the government’s support.
VIETNAM AUTOMOBILES MARKET REPORT 8 1.1. Automobiles market overview
Vietnam domestic automobile consumption, 2014 – 9M/2020 In the first 9 months of 2020, the total car consumption of the entire Thousand units domestic market reached 174.9 thousand units, a sharp decrease 300.0 120% 98.1% compared to the same period in 2019. 100% 250.0 After the surge from the second half of 2018 to the end of 2019, domestic 80% 200.0 demand for cars has been negatively affected by the epidemic. Luxury 60% goods such as cars will suffer even more in the context of all goods 32.4% 150.0 40% stagnation; only a few essential items can maintain steady sales. 20% 100.0 3.3% 0.8% All VAMA members recorded a plunge in sales; many businesses had to 0% -17.8% stop production and close local car dealerships to avoid incurring losses. To 50.0
-20% cope with decreasing demand, companies simultaneously reduced prices to
279.5 279.5 124.5 246.7 254.8 209.5 277.3 174.9 - -40% stimulate demand with preferential packages of up to thousands of USD. In 2014 2015 2016 2017 2018 2019 9M/20209T/2020 addition, VAMA also proposed to the government to be exempt from
Consumption volume Growth registration tax to incentivize automobile businesses. Source: VIRAC, GSO
Units Automobile consumption by type, 2019 – 9/2020 40,000
35,000 333 377 863 30,000 5,781 319 365 331 7,959 8,917 511 584 460 226 25,000 7,228 7,203 6,532 309 339 6,396 7,345 6,649 6,812 291 20,000 580 6,109 6,133 270 372 262 6,079 5,964 333 4,966 5,711 5810 15,000 223 4,812 27,396 2,757 176 24,823 22,528 22,314 313 10,000 3,300 19,624 20,287 20,916 21,355 20,630 19,394 3,652 17,584 17,593 15,228 15,419 14,362 12,807 12,471 13,071 13,009 5,000 8,958 7,796 0 01/2019 02/2019 03/2019 04/2019 05/2019 06/2019 07/2019 08/2019 09/2019 10/2019 11/2019 12/2019 01/2020 02/2020 03/2020 04/2020 05/2020 06/2020 07/2020 08/2020 09/2020
Passenger cars Commercial vehicles Special-purpose vehicles Source: VIRAC, VAMA VIETNAM AUTOMOBILES MARKET REPORT 9 1.1. Automobiles market overview
FAVORITE VEHICLE TYPES CONSUMPTION BY REGION
North
Favorite vehicle type: • Sedan, Hatch back, Crossover • Pick-ups, Van, Truck
Central Favorite vehicle types: • SUV • Pick-ups, Heavy truck
South South Favorite vehicle types: Source: VIRAC • SUV, MPV (Multi Purpose Vehicle) • Light truck
VIETNAM AUTOMOBILES MARKET REPORT 10 1.1. Automobiles market overview
Thousand units Automobile consumption by origin, 2019 – 9M/2020
40,000
35,000
30,000
14,711 12,539 13,459 25,000 12,542 13,251 11,358 10,773 9,426 12,211 11,391 20,000 8,155 7,977 6,947 8,889 7,786 7,276 15,000 5,919 7,986 6,188 10,000 4,749 19,769 19,700 18,799 4,361 17,826 16,162 16,994 16,406 16,595 15,874 16,088 14,047 15,269 15,275 12,594 11,697 11,878 12,869 5,000 9,599 11,095 7,685 7,400
0 01/2019 02/2019 03/2019 04/2019 05/2019 06/2019 07/2019 08/2019 09/2019 10/2019 11/2019 12/2019 01/2020 02/2020 03/2020 04/2020 05/2020 06/2020 07/2020 08/2020 09/2020
Domestic Import Source: VIRAC, VAMA
• In 2019, the ATIGA agreement reduced the tax on imported CBU cars from ASEAN to 0%, causing a mass of imported CBU cars to flood into Vietnam. The proportion of car consumption has also shifted very unfavorably for locally assembled and manufactured vehicles. In 2018, the consumption of imported cars only reached 25% of the total volume of cars, but by 2019, this rate reached 41.2%.
• Until early 2020, the car market is bleak; the volume of CBU imported cars, though cheap, still plummeted due to a decrease in demand. According to VAMA in the first 9 months of 2020, Vietnam consumed 65,074 CBU imported cars, a decrease of 30.5% compared to the same period in 2019.
• In addition to the joining of VinFast, Toyota Vietnam has recently returned to the domestic assembly of the Fortuner model after 2 years of import. Accordingly, Toyota will buy more land to expand the factory as well as build a test track, aiming to increase capacity to 90,000 cars/year by 2023.
VIETNAM AUTOMOBILES MARKET REPORT 11 1.1. Automobiles market overview
VAMA’s automobiles consumption by region, VAMA’s automobile types consumption by region, 9M/2020 Units Units 9M/2019 – 9M/2020 60,000 55,312 120,000 53,499
98,626 50,000 100,000 88,390 40,000 80,000 74,041 74,728
30,000 60,000 20,338 20,000 18,185 18,325 40,000 32,189 23,768 10,000 20,000 5,110 544 333 891 0 0 North Central South North Central South
9M/2019 9M/2020 Passenger cars Commercial vehicles Special-purpose vehicles Source: VIRAC, VAMA Source: VIRAC, VAMA
In the first 9 months of 2020, car sales decreased steadily in all 3 regions, North, Central and South. Total car sales of VAMA in all 3 regions only reached 172,537 cars, a decrease of 21.3% as compared to the same period in 2019.
• The North recorded consumption of 74,041 vehicles, a decrease of 16.2% year-on-year.
• Central Vietnam only achieved sales of 23,768 units, down by 26.2% compared to the same period in 2019, the sharpest decrease among the 3 regions. This is the region with the lowest car consumption in the country.
• The Southern region reached 74,728 units, a decrease of 24.2% compared to the same period in 2019.
• The consumption structure of vehicles has not changed much, with the highest consumption still being passenger cars due to high demand for individual vehicles; followed by commercial vehicles with trucks, pickups and buses, and finally specialized vehicles, which are mostly garbage trucks.
VIETNAM AUTOMOBILES MARKET REPORT 12 1.1. Automobiles market overview
Sales of top 10 best-seller automobiles in Vietnam, 9M/2020
19,120 Toyota Vios 2,912
12,778 Hyundai Accent 1,871
6,682 Hyundai Tuson 1,671
6,461 VinFast Fadil 1,515
8,101 Ford Ranger 1,500
7,030 Hyundai SantaFe 1,491
9,906 Mitsubishi Xpander 1,470
10,101 Hyndai Grand i10 1,313
VInFast Lux SA2.0 1,307
6,380 Mazda CX-5 1,267
0 5,000 10,000 15,000 20,000 25,000
9M/2020 9/2020
Source: VIRAC, VAMA VIETNAM AUTOMOBILES MARKET REPORT 13 1.2. Auto parts market overview
Completed auto parts production volume, 2014 - 9M/2020 • Since 2017, Vietnam stopped producing a number of high- Million units tech spare parts such as wheel rims, exhaust pipes, brakes,
12,000 450.1% 500% and shock absorbers, so output has decreased significantly. The aforementioned parts are in large quantity but bring 400% 10,000 little added value, so businesses turned to concentrated 300% production of other types of components, both for 8,000 domestic service and for export. 200% 6,000 • In the first 9 months of 2020, Vietnam's production of 28.3% 100% 4,000 -10.1% -8.0% components and spare parts reached 806.9 million units, 0% -86.8% a sharp decrease of 26.3% compared to the same period 2,000 -100% in 2019. Because of the pandemic during March, 1378.1 7581.0 9729.0 1288.1 1158.2 1065.9 806.9 production stalled, and market demand also decreased. 0 -200% 2014 2015 2016 2017 2018 2019 9M/20209T/2020 • The average localization rate of Vietnam's auto industry in Production volume Growth 2019 reached 10%, which is very low compared to other Source: VIRAC, GSO ASEAN countries. This is because Vietnam's automobile Production of components and spare parts, 9M/2020 production is still low, leading to a small scale of production, so the domestic production cost of parts is higher than the 1.37% 1.50% Other spare parts for motor vehicles 0.86% import price. Even the big business like THACO only 2.95% Ignition wire sets and other harnesses used in achieved 15-18% of the localization rate. 3.21% motor vehicles Other equipment used by motor vehicles • Within the structure for complete auto parts, other 9.68% motor vehicle parts account for the largest share with Other audio signal equipment more than 80% of output. These are small components Airbag that do not have high expertise.
Gear box • It is clear that the domestic production of auto parts is still 80.42% limited in the variety of products; moreover, some high-tech Starter-generator spare parts have stopped production, leading to higher
Source: VIRAC, GSO import of auto spare parts every year to meet the demand of domestic automobile manufacturing and assembling VIETNAM AUTOMOBILES MARKET REPORT 14 industry. 1.3. Business Environment – Government policy
Important regulatory environment in Vietnam automobile industry, 2003 – 2020
Time Event Content Impact
Cars with 7 or less seats (except passenger car business) and motorbikes of Pushing the cost of buying a 2003 Change of registration fee organizations and individuals in provinces are charged the vehicle first registration car by 5-8% fee of 5%.
• Increase in special • Increase special consumption tax from 5% to 24% consumption tax Vehicle consumption 2004 • New CBU cars are allowed to be imported into Vietnam with 100% import tax • Approval for importing new decreased by 26% rate CBU cars
Increase in special consumption Vehicle consumption 2005 Increase special consumption tax from 24% to 40% tax decreased by 32%
• Increase special consumption tax from 40% to 50% for cars with less than 5 • Increase in special Cars with less than 5 seats seats 2006 consumption tax will cost an extra 3,000 - • 7-seat car is only subject to 30% tax • Reduction in import tax 5,000 USD • Car import tax is reduced from 100% to 90%
When Vietnam joins the WTO, all types of CBU cars are reduced import tax in 3 Domestic car prices cool 2007 3 times reduction in import tax times from 90% to 80%, 70% and 60% down
VIETNAM AUTOMOBILES MARKET REPORT 15 1.3. Business Environment – Government policy
Important regulatory environment in Vietnam automobile industry, 2003 – 2020
Time Event Content Impact
• Domestic car prices • 2 times increase in import increased tax • Increase import tax for the first time from 60% to 70%, and the second to 83% • The volume of imported 2008 • Increase in registration fees • Increase the registration fee from 10% - 15% cars increased sharply • Amend special consumption • Car excise tax is charged by cylinder capacity, rather than seats before the tax increase tax law decision took effect
• New registration fee Domestic car prices 2009 • New excise tax goes into New registration fee is 12% increased effect
• Increase the registration fee bracket Domestic car prices 2011 Increase the registration fee bracket from 10 - 15% to 10 - 20% • Tighten the imported increased vehicle
The amount of imported 2014 Import tax reduction Import duties from ASEAN countries are reduced to 50% cars surged
Changing the method of The calculation of excise tax changes from cost to wholesale price, i.e. cost of calculating excise tax on Domestic car prices 2016 goods plus shipping costs, advertising, sales and profitability of the business. imported vehicles. Import tax increased Reduce tax on cars imported from ASEAN to 40% reduction.
VIETNAM AUTOMOBILES MARKET REPORT 16 1.3. Business Environment – Government policy
Important regulatory environment in Vietnam automobile industry, 2003 – 2020
Time Event Content Impact
• Tighten the imported vehicle • Decree 116 tightens the business conditions of automobile importers The number of imported 2017 • • Support domestic car In Decree 125, the import tax on automobile parts will be reduced to 0% if they cars fell sharply assembly enterprises meet the conditions set out by the government
Import tax reduction Decree Reduce tax on cars imported from ASEAN to 0%. Passenger cars with 9 seats or less 116 takes effect. Special with a cylinder capacity of 2.0 liters or less will receive a 5% discount on the special The number of imported 2018 consumption tax is based on consumption tax. Models with engines with a cylinder capacity of more than 2,500cc cars plummeted cylinder capacity - 3,000cc are subject to a 5% increase in special consumption tax
Promulgating the roadmap for the application of emission standards is issued for cars in traffic and imported used cars. • • For cars produced before 1999: level I Sustainable growth in 2019 Decree No.16/2019/QD-TTg number of automobiles • For cars produced between 1999 – 2008: level II • Reduce pollution • For cars produced after 2008: level II
• For imported used cars: level IV
• 50% reduction in registration fees for domestically-produced or assembled • Automobiles vehicles consumption increased • Decree 70/2020/ND-CP • Extension of the deadline for the payment of special consumption tax on • Imported cars had to cut 2020 • Decree 109/2020/ND-CP domestically produced and assembled cars till the end of 2020 profits to increase promotion to compete • Decree 57/2020/ND-CP • Import tax rate of 0% for raw materials, supplies and components that cannot be domestically produced for the production, processing (assembly) of supporting • Domestic auto industry products was greatly supported
VIETNAM AUTOMOBILES MARKET REPORT 17 1.3. Business Environment – Government policy
Conditions for manufacturing and assembling enterprises:
Decree No. 116/2017/ND-CP dated October 17, 2017 providing for the conditions for production, assembly, import and provision of warranty and maintenance services for all types of cars, effective from the date of signing.
Automobile production and assembly conditions:
Enterprises established in accordance with the law shall be granted certificates of eligibility for automobile production and assembly when they meet the following conditions:
• Infrastructure: a) Enterprises must have legal rights to factories, assembly technology lines, welding lines, paint lines, product quality control lines and automobile test lines that meet minimum requirements in Appendix I enclosed herewith; b) Have an automobile warranty and maintenance facility owned by the enterprise, or leased by the enterprise, or under the authorized agent system of the enterprise that satisfies the provisions of this Decree.
• Persons in charge of techniques of automobile production and assembly lines must have a university or higher degree in mechanics and automobiles, and have at least 5 years' experience in automobile manufacture and assembly.
• Having sufficient human resources and plans to ensure occupational safety and sanitation in accordance with the law.
• Satisfying the conditions of fire prevention and safety in accordance with the law on fire prevention.
• Having documents on environmental protection for automobile production and assembly plants that have been approved by agencies in accordance with the law on environmental protection.
Transition terms:
• The operating automobile production and assembly enterprises may continue operating for 18 months from the effective date of this Decree. After this time, automobile production and assembly enterprises must fully satisfy the conditions specified in this Decree.
VIETNAM AUTOMOBILES MARKET REPORT 18 1.3. Business Environment – Government policy
General provisions on automobile import business:
• Only enterprises can be considered for granting a business license to import cars.
• Enterprises are entitled to import cars after satisfying the conditions and being granted automobile import business licenses are specified in this Decree.
• Automobile importers must comply with the regulations on automobile import management in this Decree and other relevant legal documents.
Conditions for car import business:
Enterprises established in accordance with the law shall be granted the automobile import business license when meeting the following conditions:
• Have car warranty and maintenance facilities owned by the enterprise, or leased by the enterprise, or under the authorized agent system of the enterprise that meet the provisions of this Decree.
• There is a written certification or documents proving that the enterprise has the right to act on behalf of the foreign automobile manufacturer and assembly enterprise to recall imported cars in Vietnam.
Transition terms:
• The car import business will comply with current regulations until December 31, 2017;
• From January 1, 2018, enterprises are only allowed to import cars after being granted a license to import cars according to the provisions of this Decree;
• Regardless of the provisions specified at point a, Clause 2 of this Article, enterprises satisfy the conditions specified in this Decree and have the license for automobile import business granted by the Ministry of Industry and Trade before December 31, 2017 is entitled to import cars from the effective date of the License for import business.
VIETNAM AUTOMOBILES MARKET REPORT 19 1.3. Business Environment – Government policy
Do not test cars below Euro 4 emissions standards
• From January 1, 2018, the Vietnam Registry Department stopped receiving the registration, granting technical safety certificates for cars manufactured, newly assembled, or imported, using diesel fuel with unsatisfactory emissions standard Euro 4 and below. The reason is to follow the instructions of the Prime Minister in Document No. 436 dated March 28, 2017, and of the Ministry of Transport on the implementation of the roadmap for applying emission standards for cars and motorcycles.
• Accordingly, from January 1, 2018, all new manufactured, assembled and imported cars must meet level 4 emission standards by the provisions of Decision No. 49 to be inspected and issued circulation certificate. For vehicles using diesel fuel, automobile importers, manufacturers, and assemblers must have import and production plans to ensure the completion of customs procedures, registration before December 31, 2017. After this time if not completed, the vehicle must be re- exported or exported.
Reduce special consumption tax for cars below 2.0L
• According to the roadmap for adjusting the special consumption tax passed by the National Assembly at the 11th session of the 13th National Assembly. From January 1, 2018, cars with 9 seats or less, equipped with engines below 1.5L will apply the special consumption tax of 35%.
• Meanwhile, the special excise tax on cars equipped with engines that have a capacity of fewer than 2.0 liters will be 40%, a decrease of 5% compared to 2017. This will partly affect the car prices from 2018.
VIETNAM AUTOMOBILES MARKET REPORT 20 1.3. Business Environment – Government policy
Auto part manufacturers in Vietnam are entitled to enjoy incentive policies offered by the Government in accordance to Decree 111/2015/ND-CP dated on 3rd November 2015.
Some key incentive policies:
Corporate income tax Import tariff Surface water/land rent Preferential credit policy
Corporate income tax (CIT) is set 0% import tariff applied for Provincial People’s Committees Auto part manufacturers shall be at 10% for 15 years (compared to machines/ equipment imported to shall provide further incentives for granted loans at preferential standard CIT rate of 20%) create fixed assets of the auto part large auto part manufacturing interest rates from the projects projects beside the Government’s Government’s funding resources rent exemption/reduction policy.
VIETNAM AUTOMOBILES MARKET REPORT 21 1.3. Business Environment – Government policy
Changing the regulations on the price to calculate the special consumption tax on imported vehicles under 24 seats.
❖ Before January 1st, 2016:
➢ Producers: Price to calculate the special consumption tax = Factory price (including production and sales costs + profit)
➢ Exporters: Price to calculate the special consumption tax = CIF price + import tax
❖ Since January 1st, 2016: According to Decree No.108/2015/ND-CP, the price to calculate the special consumption tax on automobile is:
➢ Producers: Price to calculate the special consumption tax = Factory price (including production and sales costs + profit)
*The factory price is not lower than 105% of the price of commercial retailers.
➢ Exporters: Price to calculate the special consumption tax (wholesale price) = Cost of goods sold + costs (shipping, advertising, sales) + profit
*In which the wholesale price is not lower than 105% of the cost of goods sold.
With the calculation of special consumption tax based on the wholesale price of importers will help curb the commercial fraud and the situation of transferring price through marketing, product promotion costs or declaring the business income tax to pay less (the special consumption tax for automobile is 45-60% while business income tax is only 22% of profits). At the same time, this provision would cause the price of imported automobiles to increase by at least 5% of the current price, which is advantageous for companies distributing locally assembled vehicles, also bringing long-term benefits due to the development of domestic production.
Besides, in 2018, the tax rate on imported CBU automobiles will be 0%, while the import tariff on component still remain 20-25% (depending on components and the import market), keeping the current calculation of special consumption tax will cause the amount of taxes paid on CBU vehicles to fall sharply, making them be more advantages than domestically produced items. Therefore, the tax rate must be in line with the CKD parts for businesses to maintain local production, instead of collecting foreign currencies to import.
VIETNAM AUTOMOBILES MARKET REPORT 22 1.3. Business Environment – Government policy
Auto part manufacturers in Vietnam are entitled to enjoy incentive policies offered by the Government in accordance to Decree 111/2015/ND-CP dated on 3rd November 2015.
Some key incentive policies:
Corporate income tax Import tariff Surface water/land rent Preferential credit policy
Corporate income tax (CIT) is set 0% import tariff applied for Provincial People’s Committees Auto part manufacturers shall be at 10% for 15 years (compared to machines/ equipment imported to shall provide further incentives for granted loans at preferential standard CIT rate of 20%) create fixed assets of the auto part large auto part manufacturing interest rates from the projects projects beside the Government’s Government’s funding resources rent exemption/reduction policy.
VIETNAM AUTOMOBILES MARKET REPORT 23 1.3. Business Environment – Government policy
Roadmap of applying special consumption taxes (SCT) for automobiles
st • Changes in import tax on CBU in some countries: (1) According to the July 1 , 2016 Since No. Segment Current SCT – December January 1st, ASEAN Trade in Goods Agreement (ATIGA), which is effective from 31st, 2018 2018 January 1, 2018, the tax on cars imported from other countries in the 1 Vehicles under 10 seats ASEAN region will decrease from 30% to 0%. (2) From December 20, ≤ 1.5L 40% 35% 45% 2015, the import tax on trucks will increase according to Circular 163: From 1.5L to ≤ 2L 45% 40% trucks under 5T are subject to 70% tax, an increase of 2%; 10-20T and Above 2.0L to ≤ 2.5L 50% 50% 20-24T dump trucks are subject to 20% and 30% tax respectively. Above 2.5L to ≤ 3.0L 55% 60% • The import tax rate for cars from China is effective according to the 3.0L ≤ 4.0L 90% 4.0 ≤ 5.0L 110% ASEAN-China trade commitment (ACFTA) in 2018: 60% 5.0L ≤ 6.0L 130% • Cars of 30 or more specialized for airport use were subject to a tax of > 6.0L 150% 20% until 2018. Passenger cars designed from 6-18 tons are subject to 2 10 seats to under 16 seats 30% 15% 50% tax in 2018. From 16 seats to under 24 3 15% 10% seats • Cars and other motor vehicles designed mainly for golf players, small 4 Passenger cars racing cars, sports cars were taxed 5% and in 2018 decreased to 0%. ≤ 2.5L 15% Crane trucks, drilling cranes, firefighters, concrete mixers, road cleaning, 2.5 ≤ 3.0L 15% 20% and septic tanks are immediately subject to 0% tax. Other types are > 3.0L 25% subject to 50% tax in 2018. 5 Electric cars • The tax reduction roadmap has been approved: Vietnam has signed a Under 9 seats 25% 15% free trade agreement (CPTPP), committing to gradually reduce the From 10 seats to 16 seats 15% 10% import tax on CBU cars to 0% after 7-9 years. Vietnam and the EU have From 16 seats to 24 seats 10% 5% Carrying both people and also signed a free trade agreement (EVFTA) committing to gradually 10% 10% cargo reduce the import tax on CBU cars to 0% after 9-10 years. The price of Vehicles powered by 6 50% of the tax on same type vehicles imported CBU cars will drop from 1.2 to 1.5 times, helping to stimulate biofuels shopping demand. 7 Motorhome vehicles 60% 70% 75% Gasoline combined electrical 8 energy powered vehicles 70% of the tax on same type vehicles (fuel not exceeding 70%)
VIETNAM AUTOMOBILES MARKET REPORT 24 Source: VIRAC summarized from Ciircular No. 165/2014/TT-BTC 1.3. Business Environment – Government policy
On November 16, 2017, Decree No.125/2017/ND-CP was issued amending and supplementing a number of articles of Decree No. 122/2016/ND-CP dated September 1, 2016 of the Government on the Export Tariff, Preferential Import Tariff, List of Goods and Absolute Tariff, Mixed Tax, and Non-Quota Import Tax. The Decree took effects from January 1, 2018.
Car types Taxes rate
9-seat-or-less Cylinder capacity under 1,000cc Absolute tax at 10,000 USD/unit passenger cars Cylinder capacity between 1,000 and 2,500cc Used car price multiply tax rate of a new car of the same type + 10,000 USD (cylinder capacity Under-16-seat under 1,000cc) Cylinder capacity above 2,500cc Used car price multiply tax rate of a new car of the same type + 15,000 USD used passenger Mixed tax of 200% or 150% + 10,000 USD per unit SUVs, sport cars excluding vans (cylinder capacity above 1,000cc) cars (based on the lowest rate) Cylinder capacity under 2,500cc Used car price multiply tax rate of a new car of the same type + 10,000 USD 10-to-15-seat cars Cylinder capacity above 2,500cc Used car price multiply tax rate of a new car of the same type + 15,000 USD
16-seat-or-more passenger cars Remain unchanged
On February 21, 2019, the Government issued Decree No.20/2019/D-CP amending and supplementing a number of articles of Decree No.140/2016/ND-CP dated October 10, 2016 of the Government on registration fee.
In which, there are provisions relating to registration fee applicable to cars:
From April 10, 2019, pick-ups and vans will have to pay the first registration fee equal to 60% of the initial fee of cars with less than 9 seats. Thus, with the current registration fee of 10% for cars of less than 9 seats, registration fee for pick-ups applied from April 10, 2019 will be 6%, increasing 3 times higher than the previous 2%. Particularly in Hanoi, the registration fee for pick-ups and vans will be higher than other localities, at 7.2% due to the current registration fee of passenger cars of less than 9 seats at 12%.
The pick-ups truck is considered a multipurpose vehicle with tonnage of less than 1.5 tons, suitable for both city and rural use thanks to its ability to carry people and cargo at the same time, so businesses import complete built-up ones to Vietnam for distribution. In particular, this is a car with comfortable equipment and modern technology but has the advantage of low registration fee (only 2%) making this car the choice of many people.
VIETNAM AUTOMOBILES MARKET REPORT 25 1.3. Business Environment – Government policy
In 2020, due to Covid-19’s impacts, domestic automobile industry was benefiting from three recently government incentive policies:
(1) 50% reduction in registration fees for domestically-produced or assembled vehicles in effect from June 28 to the end of 2020.
(2) Allow automakers who met the requirements of outputs to enjoy zero import tariffs for automobile components which could not have been produced domestically, helps cutting production costs by 2-2.5%.
(3) Extension of the deadline for the payment of Special Consumption Tax on domestically produced and assembled cars till the end of 2020.
➔ These policies would help lower production and service costs, making cars more affordable to more people.
On February 5, 2020, the Government loosen conditions for importing cars by issuing Decree No.17/2020 – on adjustments and supplements to Government Decree No.116/2017 stipulating regulations on car manufacture, assembly, imports and warranty services. Automobile importers in Vietnam will no longer have to obtain a Vehicle Type Approval (VTA) certificate from authorities in exporting countries, making it easier for them to import cars into the country. Decree No.17/2020 has also relaxed its rules on clearance procedures for imported cars.
Overall, Decree No.17/2020 helps reduce the amount of time needed for the clearance process and lower the costs for inspections, testing and storage for automobile importers.
➢ For imported cars: To annul regulations on type quality certificates specified in Clause 11, Article 3 of Decree 116.
➢ For automobile manufacturing and assembling enterprises:
• To annul the regulation that there must be persons in charge of automobile production and assembly lines having university or higher degree in the mechanics and automobile disciplines and have experience in automobile manufacture and assembly. at least 5 years as prescribed in Clause 2, Article 7 of Decree 116;
• To annul the regulations on having sufficient manpower and plans to ensure occupational safety and sanitation in accordance with the law on occupational safety and sanitation in Clause 3, Article 7 of Decree 116;
• To annul the regulations on the satisfaction of fire prevention and fighting safety conditions and fire-fighting plans in accordance with the law on fire prevention and fighting in Clause 4, Article 7 of Decree 116.
VIETNAM AUTOMOBILES MARKET REPORT 26 1.3. Business Environment – Trade Agreement
ASEAN free trade area (AFTA) – Import taxes procedure:
2013 – 60% 2014 – 50% 2015 – 50% 2016 – 40% 2017 – 30% 2018 – 0%
Non-tariff barriers were set up to protect the domestic auto industry. Facing fierce competition from imported cars, especially when the tax rate for cars imported from ASEAN is reduced to 0%, the Government has issued a number of policies aimed at protecting the domestic automobile manufacturing and assembly industry. For example, Decree No.116/2017 tightens business conditions for automobile importers; circular 03/2018 providing for technical safety quality inspection and environmental protection for imported cars; Decree No.125/2017 on the reduction of import tax on car components with terms of annual output is expected to support domestic car manufacturers.
EU-Vietnam free trade agreement (EVFTA)
In June 2019, the EU-Vietnam Free Trade Agreement (EVFTA) was signed after 9 years of negotiation. According to the roadmap, EVFTA can be ratified by the EU in the first half of 2020. According to the regulations, the agreement takes effect 2 months later or at a time agreed by the two sides.
EU Vietnam Goods Base tax rate Route Base tax rate Route • 0% with agricultural tractors Tractor (8701) A 5-30% B10 • 16% for tractors
70% Bus (8702) 10-16% B7 B10 5% for vehicles weighted 6-18 tons
78% for vehicles under 3,000 cc B10 Car (8703) 10% B7 74% for vehicles over 3,000 cc B9 15% for specialized vehicles B9/B10
15% for vehicles under 3,000 cc B10 10-22% B7 Truck (8704) 65% for vehicles weighted under 5 tons B10 3.5% for dedicated trucks A 0% for vehicles weighted over 45 tons A
Auto spare parts (8708) 3-4% A 5-25% B7
VIETNAM AUTOMOBILES MARKET REPORT 27 1.3. Business Environment – Trade Agreement
Meaning of symbols:
• A: The base tax will be eliminated as soon as the agreement comes into force
• B7: The base tax is eliminated after 8 regular reductions, once a year, starting from the year the agreement comes into force.
• B9: The base tax is eliminated after 10 regular reductions, once a year, starting from the year the agreement comes into force.
• B10: The base tax is eliminated after 11 regular reductions, once a year, starting from the year the agreement comes into force.
The Government maintains a policy of protecting the auto industry when joining EFTA. Looking at the roadmap of tax cuts on both sides of possible auto goods, Vietnam is implementing a policy of protecting the automobile manufacturing and assembly industry, with a high base tax rate, and an extended protection period.
VIETNAM AUTOMOBILES MARKET REPORT 28 1.3. Business Environment – Automobiles market features
Number of automobiles manufacturing and assembling Number of labors in automobiles industry, 2014 – 2019 enterprises, 2014 – 2019 35,000 32,564 70% 100 30% 30,000 60.4% 60% 90 26.92% 25% 80 50% 20% 25,000 70 17.02% 17.11% 20,302 40% 15% 60 20,000 17,937 17,638 12.12% 16,284 30% 50 10% 14,503 15,000 40 20% 5% 15.1% 30 2.70% 10,000 12.28% 0% 10.15% 10% 20 5.75% 5,000 -5% 0% 10 -5.45% -1.67% 55 52 66 74 76 89 - -10% - -10% 2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019
Number of enterprises Growth Number of labors Growth Source: VIRAC, GSO Source: VIRAC, GSO
The number of enterprises operating in the field of manufacturing and assembling domestic cars in 2019 increased by 17.11% compared to 2018, reaching 89 enterprises.
• The number of automobile manufacturing and assembling enterprises in the past year has increased significantly, due to the fact that the Government has had policies and decrees to develop the domestic automobile industry. However, production technology is still basic, the localization rate (refer to page No.34 and 35) is still quite low compared to other countries in the region.
• In addition, domestically produced cars also have to compete with imported cars from other countries in the ASEAN region (Thailand, Indonesia, ...) as prices for imported cars are relatively lower than that of domestic ones.
The domestic automobile industry is on the rise, the number of automobile manufacturing and assembling factories has continuously increased each year, leading to the great attraction of the industry to the workforce. In 2019, there were more than 32 thousand employees in the field of automobile production and assembly, up to 60.4% compared to 2018. The highly trained workforce has gradually met the needs of the domestic market.
VIETNAM AUTOMOBILES MARKET REPORT 29 1.3. Business Environment – Automobiles market features
Revenue of automobile manufacturing and assembling Revenue of automobile wholesaling and retailing,
USD million industry, 2014 – 2019 USD million 2014 – 2019 16,000 120% 25,000 60% 109.3% 52.7% 14,000 100% 50% 20,000 12,000 40% 80% 35.5% 10,000 15,000 30% 60% 27.6% 8,000 20% 46.9% 40% 10,000 6,000 10%
18.3% 20% 4,000 -0.5% 0% 8.5% 5,000 0% 2,000 -10.9% -10% -7.6% 2,490.6 3,811.2 5,599.6 6,622.4 6,121.1 6,638.8 13,892.4 8,095.4 12,365.6 16,755.3 14,932.2 19,053.4 18,954.2 0 -20% 0 -20% 2013 2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019
Revenue TăngGrowth trưởng Revenue TăngGrowth trưởng
*Exchange rate: USD/VND = 23,230 *Exchange rate: USD/VND = 23,230 Source: VIRAC, GSO Source: VIRAC, GSO
• Revenue from car manufacturing and assembly activities recorded strong growth in 2019. This is an impressive growth in the period of 2014 - 2019 thanks to the support and promotion of domestic automobile production along with that is the rise of major car manufacturers with domestic production and assembly lines such as THACO, Toyota, VinFast, etc.
• However, the car wholesale and retail industry saw a slight decrease in revenue of 0.5% compared to last year, reaching USD 18,954.2 million. The reason is that the volume of cars consumed is not increased significantly in addition to the decrease in car prices due to the impact of the reduction of import tax on CBU from some regions, causing the car price to drop overall.
VIETNAM AUTOMOBILES MARKET REPORT 30 AUTOMOBILES SUPPLY CHAINS
TierNhà- 3cung suppliers cấp cấp 3 TierNhà- cung2 suppliers cấp cấp 2 TierNhà- cung1 suppliers cấp cấp 1 OEMOEMs lắp ráp
• 138 suppliers
• 5 spare parts manufacturers • 83 suppliers • 21 assembling OEMs
• 178 other parts manufacturers
• 61 motorbike spare parts suppliers
• 50 motorbike and automobile spare parts suppliers
• 18 automobile spare parts suppliers • 5 Japanese OEMs • 277 other parts suppliers • 2 USA OEMs (GM, Ford)
• 177 Japanese suppliers • 1 German OEM (MBV)
• 136 Vietnamese suppliers • Vietnamese and other country • 57 Taiwanese suppliers OEMs
• 14 Korean suppliers
• The rests from USA, Germany, Malaysia, etc.
• Simple mechanical automobile parts can be supplied by local SMEs • Simple spare parts and assemblies • CKD automobiles assembling • Complicated and high-tech automobile parts are manufactured by FDI such as chairs, batteries, bulky plastic • Production procedure: welding, enterprises for export details, etc. painting, assembling, checking
Source: MOIT, ASEANSC
VIETNAM AUTOMOBILES MARKET REPORT 31 1.3. Business Environment – Automobiles market features
Vietnam level of participation in global automobiles
4.0 value chain
Vietnam
participation Value added Valueadded 3.0 value chain
Research Design Auto parts Assembling Marketing Others manufacturing
Source: VIRAC, ASEANSC
According to World Bank, Vietnam's participation in the global value chain is mostly the last stage of assembly, and this stage always has the lowest share of value-added in the value chain. Moreover, when the global value chain moves to the 4.0 value chain, the value added in assembly will be narrower.
However, with the Government's support for domestic auto assemblers, Hyundai Thanh Cong, Truong Hai and VinFast are expected to create a triangle for the development of Vietnam's auto manufacturing industry.
VIETNAM AUTOMOBILES MARKET REPORT 32 1.3. Business Environment – Automobiles market features
• Due to the Price Appraisal Center – Ministry of Finance, until 2020, the cost of producing cars in Vietnam is about 20% higher than that of Thailand and Indonesia: After 25 years of development, Vietnam's automobile industry is still extremely small and weak, not only in comparison with major manufacturing centers in the world but also with other regional countries.
• There are about 20 large domestic and foreign assemblers. Domestic production only meets about 60-70% of domestic demand, and this number is on the downward trend in recent years due to increasing competition from imported vehicles.
• The weakness of the auxiliary component manufacturing industry and the lack of uniformity in the transport infrastructure is the reason for the slow development of the automobile industry in Vietnam:
➢ Vietnam's automobile industry still depends on imported spare parts, so it is only involved in assembly and distribution of cars in the domestic market.
➢ As a result, domestic manufacturers have to bear the cost of packaging, logistics and import duties on components. This leads to a 20% higher cost of automobile production in Vietnam than Thailand and Indonesia.
➢ The number of Vietnam's automobile manufacturers in 2019 is only about 89, much less than other ASEAN countries.
➢ One of the reasons that make the automobile industry in Vietnam weak is the fact that domestic firms have not yet cooperated, associated and specialized between automobile assembly and production with production of spare parts and components.
➢ Locally-produced products contain very low technology content including tubes, automobile tires, seats, mirrors, glasses, wires, batteries, plastic products.
• Tier-1,2,3 suppliers has not been able to cooperate with the car manufacturers: Many domestic supporting companies cannot become partners with car manufacturers because the prices are not competitive compared to imported sources since Vietnam's car output is still low, making suppliers unable to invest in machinery, equipment, technology, and people with such a small market size. Besides, products requiring high technical requirements, the quality of the domestic supplier cannot meet the requirements, and lack of supplier network.
• Opportunities for the Vietnamese auto parts production market:
➢ Vietnam is facing the greatest opportunity to become a new manufacturing hub in the world. Manufacturing enterprises continue to move out of China due to rising costs; trade conflicts with the United States, and manufacturers' strategies to minimize dependence on a single market, especially after Covid-19.
➢ The CBRE Vietnam report shows that tier-1 suppliers are expanding rapidly in the Vietnam automobile market, such as Bosche, Schaeffler, and Mitsubishi Motors. Industrial complexes located near ports and car manufacturers will attract new investors. Northern provinces such as Vinh Phuc, Hung Yen, Hai Phong, and Hai Duong are expected to become the focus of investment in the future.
VIETNAM AUTOMOBILES MARKET REPORT 33 1.3. Business Environment – Automobiles market features
Localization rate of countries in Asia, 2019 Localization rate in Vietnam’s car industry remains low compared to Asean 55% 45% regional peers for 4 main reasons:
• Small car sale volume: Due to low vehicle demand, investment Malaysia 65% 35% in technology for localization is much more expensive than importing from neighboring countries. Car sales in Vietnam Indonesia 70% 30% reached 385,600 units last year (2019), but the size of the Indonesia and Thailand market was 2.6 times bigger and that of Thailand 80% 20% Malaysia, 1.6 times. For October 2020, the total sales volume of the members of the Vietnam Automobile Manufacturers’ Vietnam 10% 90% Association (VAMA) was 204,144 units, a decrease of 17% in comparison to October 2019. 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Domestic Import Source: VIRAC, VAMA
• Heavy reliance on imported raw materials: about 80-90 percent of the main raw materials used to manufacture components are still imported. As a result, companies are required to import approximately USD 2 to 3.5 billion in components and parts for vehicle manufacturing, assembly, and repair each year.
• Under-developed local supporting industries: the local automobile industry has not been able to invest in core and high technology products such as engine production and transmission systems. Localized parts are mostly of low technology products such as tires, seats, mirrors, glasses, cable harnesses, batteries, and plastic products.
• A latecomer in the automobile industry: Vietnam’s automobile industry only got its proper start in the 2000s, 20 or 30 years after Thailand or Indonesia. This is one of the reasons attributable to the lack of an ecosystem to support the automobile industry in Vietnam.
VIETNAM AUTOMOBILES MARKET REPORT 34 1.3. Business Environment – Automobiles market features
Localization rate of major vehicle types, 2020 Plan to increase the ratio of domestic manufacturing value to automobile Production due to Decree No.1211/QD-TTg
Under-9 passengers vehicle 2020 2025 2035 53%
9-passenger vehicles 30% - 40% 40% - 45% 55% - 60% 10-or-more passengers vehicle
10-or-more passenger vehicles 35% - 45% 50% - 60% 75% - 80%
Under-7 tons truck Trucks 30% - 40% 45% - 55% 70% - 75%
0% 10% 20% 30% 40% 50% Special purpose vehicles 25% - 35% 40% - 45% 60% - 70%
Source: VIRAC, ASEANSC Source: VIRAC, Ministry of Industry and Trade
VIETNAM AUTOMOBILES MARKET REPORT 35 1.3. Business Environment – Automobiles market features
Development of automobile industry in some ASEAN countries
Vietnam Philippines Indonesia Thailand
MAINTENANCE DEVELOPMENT MATURE
Thanks to the expansion of the The size of the market is small, low Accelerate technical know-how, market, the competitiveness is on Description competitiveness of the production compete with vehicles of other the same level as that of imported cost compared to imported vehicles countries in foreign markets. cars from other countries
• High production costs • Low tech • High labor cost • Low localization rate • Low capacity • Manpower shortage Problems • Low production rate
Promote expansion of market size
Investment promotion (increase production capacity - localizationrate)
Essential support from Domestic car protection/ Commercial promotion the government narrowing gap of Promoting investment production costs in products with high added value
VIETNAM AUTOMOBILES MARKET REPORT 36 1.3. Business Environment
Vinh Phuc Ninh Binh Hai Phong
Hanoi
Vietnam autombile Da Nang industry consists of less than 10 key players that already had their own factories in Vietnam. These Quang Nam factories located at some big industrial parks in the North and Central of Vietnam with brands: TC Motor, THACO and a new Binh Duong Dong Nai Vietnamese brand VinFast.
Can Tho
VIETNAM AUTOMOBILES MARKET REPORT 37 1.3. Business Environment – Hai Phong Industrial complex
Hai Phong
VIETNAM AUTOMOBILES MARKET REPORT 38 VINFAST’S AUTOMOBILE FACTORY 1.3. Business Environment – Hai Phong Industrial complex
Hai Phong transport & logistics infrastructure
Hai Phong – Hanoi highway •50% reduction to the normal rate for lifetime of the project for The 105.5km highway shortened traffic time between the two cities from 4 hours to Personal income locals and expats. tax 1.5 hours. Passage of 18-ton truck and 40-feet container becomes accessible •(Other industrial zones: 0% reduction). Cat Bi international airport The 105.5km highway shortened traffic time between the two cities from 4 hours to 1.5 hours. Passage of 18-ton truck and 40-feet container becomes accessible Tan Vu – Lach Huyen Ocean bridge Connecting Hai Phong city with Lach Huyen Int‘l Deep Water Port. Constructed as the longest bridge with 15km in-length in Vietnam •Goods exempted duty are: •Goods from free trade zones Lach Huyen international deep water port Import – export exported. Constructed with 14m in water depth, 2 berth to host cargo vessels with loading tariff •Goods imported into free trade capacity of 100,000 tons. Traffic time to USA and EU is shortened by about 1 week zones and only used in free trade zones Dinh Vu – Cat Hai economic zone indices
Area Population •Goods traded between foreigners using in free trade zones has been 22,540 ha 310,000 exempted VAT tax; VAT tax •Goods & services sold in free trade zones has been applied 0% Tariff zones Port system VAT tax. 12,932 ha 1,046 ha
39 VIETNAM AUTOMOBILES MARKET REPORT 39 1.3. Business Environment – Hai Phong Industrial complex
VinFast industrial complex:
The project located on Dinh Vu – Cat Hai industrial zones, with an area of 335 ha. Designed capacity of VinFast industrial complex
1st stage: 3,000 units per 1st stage: An operation zone 250,000 units per year 250,000 units per annum; annum;
An electrical motorbike 2nd stage: 2nd stage: manufacturing zone
500,000 units per 500,000 units per Automobile
annum Electricalbus annum;
An automobile manufacturing Expansion plan:
zone Electricalmotorbike 1 million units per annum. An electrical bus manufacturing zone Source: VIRAC, VinFast
Automobile manufacturing zone contains a body shell workshop, an An auxiliary industrial zone
VinFast VinFast industrialcomplex automobile paint workshop, an engine workshop, an assembly workshop and an auxiliary workshop. Key components such as engines and chassis will be purchased from leading European and US designers. A trainning center The project is invested by big corporations such as Bumper, Aapico, Lear, ZF to invest in large-scale factories to manufacture and assemble engines, front and rear axle assemblies, to manufacture, assembling car A research and development institute. seats, manufacturing car front bumper, rear bumper, stamping and welding frame details, assembling batteries for electric cars and Source: VIRAC, VinFast motorcycles.
40 VIETNAM AUTOMOBILES MARKET REPORT 40 1.3. Business Environment – Hai Phong Industrial complex
Body welding Painting Engine Assembly Auxiliary Stamping workshop workshop workshop workshop workshop workshop
Area (m2) 50,000 100,000 25,000 50,000 200,000 20,000
38 units per More than 800 Capacity 16 units per min hours units per day Manufacturing 21.88% 14.4% growth rate With the process monitoring VinFast body The EcoSmart The workshop is The line is Auxiliary by technology of SCHULER welding VEC intelligent air designed and designed and workshop Company (Germany), the workshop. management supplied by supplied by a includes paint data are collected online by designed and system by Dürr leading partners leading supplier area of plastic equipment acompanying supplied by comes from the such as GROB, Eisenmann, with details (front with assemble lines. By leading partners Germany, Thyssenkrupp, highly automated bumper, rear continuously checking actual such as FFT, EBZ, fully automatic, AVL, conveyors and bumper) with parameters, production HIROTEC, is delivering power MAG, using the self-controlled friendly paint status and technical issues equipped with on demand latest in precision vehicles that are technology are quickly identified and about 1200 ABB- through real- mechanical interlocked environment required measures made robots. time recording technology to together. In provided by equipment is promptly set This is modern in production. machine the addition, the supplier Dürr. In up and implemented to and fully This technology Engine heads, assembly stages addition the
ensure the quantity and automatic body significantly Engine body and are equipped workshop also VinFast industrial VinFast complex quality of products. In welding machine reduces the Shaft with modern has addition, smart diagnostics in Vietnam and amount of air engine Atlas Copco tire finishing area at workshop works like black Southeast Asia.. and electricity crankshaft. torque clamps and capacity to boxes on an airplane: consumed when linked expand for future Specific data are self- drying new production lines molding of directed vehicles ensure that the plastic parts. continuous storage. In case paint. tightening force of a breakdown or failure, a of each assembly retrospective analysis can be is controlled and performed to confirm retrievable identifying the cause, for at all times. example software bugs or machine parts or lines.
41 VIETNAM AUTOMOBILES MARKET REPORT 41 6.11.3. Business Environment – Hai Phong Industrial complex
• Favorable geographical location: Hai Phong has the • Tax policy is not stable and synchronous; largest seaport in the North, an important trading hub • Transport and supply costs for auto manufacturers are between the North and regional countries. In addition, still high due to limited localization and low Hai Phong Industrial Park has a full range of traffic competitiveness of foreign manufacturers. types, maximum support for Logistics for the automotive industry. • Lack of high-skilled labor in automobile industry;
• Enjoy the policy of promoting transport infrastructure and economy. Dinh Vu - Cat Hai Industrial Park is one of the 16 economic zones that enjoy the most S W incentives. Hai Phong's integration capacity is enhanced with a series of technical infrastructure works.
• Hai Phong is actively implementing policies to support • Domestic car production is still low, and the high rolling businesses to expand investment, prioritizing the costs make cars a luxury item, and demand is not high. development of the automobile and supporting O • The quantity of domestically produced components and industries to attract major car manufacturers, typically T accessories is small, less diversified and of poor quality, VinFast. and difficult to compete with ASEAN countries such as • Program to support investment in technical Thailand and Indonesia. infrastructure of industrial clusters, guaranteed by the • Difficulties in mobilizing resources, especially capital, budget of Hai Phong city for the period 2019 - 2025 human resources and technology to establish a concentrated automobile manufacturing and assembly industrial park
42 VIETNAM AUTOMOBILES MARKET REPORT 42 1.3. Business Environment – Quang Ninh Industrial complex
Major Industrial Parks in Quang Ninh
Total Name Major industry area (ha)
Building materials manufacturing, Dong Mai Industrial park 160 Textile, etc Quang Ninh Hai Yen Industrial park 182.4 Home furniture manufacturing, etc.
Wooden furniture manufacturing, Cai Lan Industrial park 242.8 Shipbuilding, etc
Auto parts manufacturing, Mechanical Viet Hung Industrial park 301 engineering, etc
Electronic manufacturing, Consumer Hoanh Bo Industrial park 681 goods industry, etc
Phuong Nam Industrial park 709.1 High-tech industry
Hai Ha Industrial park and sea 4,988 Seafood processing industry port
Dam Nha Mac Industrial and 3,710 Shipbuilding, Logistics service, etc service park
Source: VIRAC, Kland Quang Ninh is located in the North-east of Vietnam. To the north, it is adjacent to China with 118.8 km border and Gulf of Tonkin to the east. Quang Ninh has a geostrategic position in terms of politics, economics, military and foreign affairs. It is located in the Vietnam-China economic cooperation area with ”Two Corridors and One Belt”, inter-regional cooperation of extended Gulf of Tonkin, ASEAN-China connection point and Nam Ninh-Singapore economic corridor.
VIETNAM AUTOMOBILES MARKET REPORT 43 1.3. Business Environment – Quang Ninh Industrial complex
Viet Hung Industrial Park is invested in Ha Long City with the scale of 300 hectares. The Besides, Vietnam’s conglomerate Vingroup also complex plays an important role in implementing the policy of attracting projects of announced a plan to invest in an industrial processing industry, manufacturing, using modern technology. It’s the result of cooperation production complex south of Luc Lam River at between Quang Ninh province and Thanh Cong Group to build an environmentally friendly car Mong Cai border with a capital scale of more than factory. The complex is built on a total area of 340 hectares, with a strategic location, located right on $147.8 million in order to manufacture spare parts the banks of Cua Luc Bay, convenient for both domestic and international trade. It’s expected to and accessories for cars and other motor vehicles. attract many businesses in the automotive supporting industry, manufacturing components and spare • The project is divided into two investment phases. parts. Phase 1 (2020 - 2022) will focus on investing in building production lines for auto components, accessories and spare parts with an expected capacity of 500,000 sets/year. Phase 2 (2022- 2025) expands auto parts factories, and increases the capacity to 1,000,000 sets/year.
• DEEP C invested in two industrial zones in Quang Yen town – Bac Tien Phong and Nam Tien Phong IZs, also known as DEEP C Quang Ninh – on a total area of 1,680 ha. In DEEP C’s investment plan, a 150,000 m2 ready-built factory space at DEEP C Quang Ninh is scheduled to be built and put into operation next year.
THANH CONG – VIET HUNG AUTOMOTIVE SUPPORTING INDUSTRIAL COMPLEX MAP
VIETNAM AUTOMOBILES MARKET REPORT 44 1.3. Business Environment – Quang Ninh industrial complex
Viet Hung Industrial Park
Infrastructure investors Cienco 5
Location Viet hung commune, Ha Long city, Quang Ninh province
Scale Total area base on Master plan: 301 ha
• Decision No.519/TTg by the Prime Minister on 06/8/1996 to approve the establishment of Viet Hung industrial park.
• Document No.727/TTg-CN by the Prime Minister on 15/5/2006 to set up Viet Hung industrial park.
• Decision No.2416/QD-UBND of Quang Ninh Provincial People's Committee on 17/8/2006 to approve constructing and servicing infrastructure Viet Hung Industrial park in Ha Long City. Documents • Document No.1154/BXD-KTQH by the Ministry of Construction on 28/07/2004 to approve plans of Viet Hung industrial park.
• Decision No.330/QD-UBND of Quang Ninh Provincial People's Committee on 26/01/2007 to approve detailed construction planning ratio 1/20000 of Viet Hung industrial park.
Land lease period 50 years
• Industry assembly
• Manufacturing engineering, interior vessel; Contents of land use according to Master plan approval • Construction material production, documents • Processing agricultural products, aquatic products, consumer goods production;
• Investors are allowed to propose of adjusting industrial sectors plan to match practical
Land lease method Land lease
VIETNAM AUTOMOBILES MARKET REPORT 45 1.3. Business Environment – Quang Ninh industrial complex
Dong Mai Industrial Park
Infrastructure investors Viglacera Infrastructure Investment Development Company – The Vietnam Glass and Ceramic for Construction Corporation
Location Quang Yen town, Quang Ninh province
• Planned total area: 160 ha
Planned total area and current status • Current status of Ip: Technical infrastructure works outside the fences of the industrial zone such as the power supply system, water supply and drainage system, traffic system, communication system... have been invested for construction. Currently, investors have been implementing construction site clearance and infrastructure investment. Approved document
• The industrial zone belongs to the Planning for developing Industrial Zones in the whole country until 2020 approved by the Prime Minister in Decision No 1107/QD-TTg of August 21st, 2006.
Legal documents • Established under the Decision No 2276/QD-UBND of July 14th, 2008 of Quang Ninh Provincial People’s Committee.
Decision on planning approval
Detailed construction planning at 1:2,000 scale for Dong Mai Industrial Zone was approved by Quang Ninh Provincial People’s Committee in Decision No 1153/QD-UBND April 17th, 2008.
Land lease period 50 years
• Dong Mai Industrial Zone is oriented to become the industrial zone that would not make the environment polluted with the encouraged investment sectors: Mechanical engineering, Transport equipment assembly, Construction Contents of land use according to material manufacturing, Interior architecture, Precision machining and mechanical assembly, Agricultural products and Master plan approval documents food processing, Medical devices manufacturing, Electronic and electrical devices assembly and manufacturing, Consumer goods production, Textile, garments and some other industries.
• Investors are allowed to propose adjustments to the planning of industries in the industrial zone to meet the practice.
Land lease method Land lease or factory hiring
VIETNAM AUTOMOBILES MARKET REPORT 46 6.11.3. Business Environment – Quang Ninh industrial complex
• Quang Ninh Industrial Park is adjacent to a high-speed • The connectivity of inter-regional traffic has not been system with a route across the border with China, fully optimized and some bottlenecks in important traffic converging types of transport: Van Don international routes have not been resolved airport, Lach Huyen seaport suitable to form a biological Manufacturing industrial zones associated with Logistics
• Policies and incentives to promote businesses in the field of automobile production and assembly S W
• Quang Ninh is in the process of completing projects • The progress of production and assembly projects is on the road connecting Cai Lan Industrial Park to Ha still slow, unsatisfactory due to the impact of ineffective Long - Van Don Expressway and Van Don - Mong Cai O site clearance Expressway to create a basis for supporting T • Challenges in administrative procedure reform and transportation for businesses developing high-quality human resources • Policy of economic development towards restructuring industries, improving technology map and expanding connection with other industrial zones in the region
VIETNAM AUTOMOBILES MARKET REPORT 47 1.3. Business Environment – Chu Lai industrial complex
CHU LAI INDUSTRIAL PARK
Quang Nam THACO AUTOMOBILE COMPLEX
48 VIETNAM AUTOMOBILES MARKET REPORT 48 1.3. Business Environment – Chu Lai industrial complex
Since 2003, THACO has invested in Chu Lai Industrial Park to form THACO CHU LAI open economic zone with the total acreage of 1,200 ha. THACO CHU LAI consists of 4 major industries that the company has already had strengths and opportunities:
• Mechanical engineering & automotive industry (325 ha)
• Agricultural & Forestry (451 ha)
• Sea port & Logistics (140 ha)
• Chu Lai Real estate (320 ha)
THACO CHU LAI industrial park
Location Hamlet 4, Tam Hiep Commune, Nui Thanh District, Quang Nam Province
Total investment Over USD 3.4 billion
• Road: THACO CHU LAI located on the main national traffic junctions, including 1A National Highway, north-south railway and Da Nang – Quang Ngai expressway Transportation • Seaways: THACO CHU LAI is 2.5 km away from Chu Lai port (port number 1 - Tam Hiep port). Chu Lai port belongs to the national Infrastructure seaport system, with the advantage of being a wind-tight port, convenient for cargo ships to enter and dock • Airways: THACO CHU LAI is 15 km away from Chu Lai airport. This is the largest airport in Vietnam, currently has routes Chu Lai - Hanoi and Chu Lai - Ho Chi Minh City
• Electricity: Power is supplied from the national grid via 110KV Ky Hoa transformer station with 2 transformers with capacity of 40 MVA each, providing stable power to the industrial park • Water supply: provided by Tam Hiep Water Plant with a total capacity of 20,000 m3/day and night to ensure sufficient water supply, Technical infrastructure connected to the fence of businesses • Wastewater treatment system: wastewater is treated locally from each factory and sent to a general treatment area. Waste water collection and treatment system for North Chu Lai Industrial Park - phase 1 with capacity of 1,900 m3/day and night has been put into operation
Source: VIRAC, THACO VIETNAM AUTOMOBILES MARKET REPORT 49 1.3. Business Environment – Chu Lai industrial complex
Organizational structure of automotive department at THACO Chu Lai
General manager of automotive and mechanics
Vice manager of Vice manager of Vice manager of automotive automotive mechanics manufacturing supporting industry
Trucks and buses Passenger vehicles Mechanical Automotive Design and manufacturing and manufacturing and manufacturing and supporting commercial assembling assembling processing factories companies factories factories complexes
Source: VIRAC, THACO
VIETNAM AUTOMOBILES MARKET REPORT 50 1.3. Business Environment – Chu Lai industrial complex
Factories of THACO Chu Lai industrial complex
THACO passenger THACO Semi- THACO Bus THACO Truck THACO Kia THACO Mazda vehicles trailer and trailer
Operational time May 2019 December 2017 March 2020 September 2019 March 2018 February 2016
Total invesment USD 190 million n/a USD 190 million USD 20 million n/a USD 6.5 million
Total acreage 7.5 ha 17 ha 11 ha 31 ha 30.3 ha 4 ha
20,000 units per 20,000 units per year: 50,000 units per 50,000 units per 100,000 units per Capacity 5,000 units per year year • 8,000 buses year year year • 12,000 minibuses
Peugeot 3008, Trucks, Dump trucks Kia Morning, Kia Peugeot 5008, 12, 47, 60-seat Hooded trailers, and Specialized Soluto, Kia Cerato, Mazda 3, Mazda 6, Peugeot Traveller buses in 3 Special-purpose Types of products trucks branded Kia Optima, Kia Mazda CX-5, Mazda Premium and segments: Deluxe – trailers, concrete Foton, Forland, Kia, Rondo, Kia Sorento, CX-8 Peugeot Traveller Luxury - Premium mixing tanks, etc. Mitsubishi Fuso Kia Seltos Luxury
Source: VIRAC, THACO
VIETNAM AUTOMOBILES MARKET REPORT 51 1.3. Business Environment – Chu Lai industrial complex 6.1
• Chu Lai industrial park has a convenient transportation • Transportation infrastructure among Chu Lai industrial infrastructure that includes highway, airways and park is unequal, esspecially outside THACO Chu Lai. seaways with the distance of under 10 km Lack of investment and incentive policies make it hard for synchronzing • THACO Chu Lai is the biggest automotive industrial complex of Vietnam due to its parties of automobile • Lack of connectivity with other economic centers such assembling industry and supporting industry as Hanoi and Ho Chi Minh City altogether
• THACO Chu Lai has a long period of development and S W has fulfilled the manufacturing process in order to raise the localization rate
• Quang Nam province has been improving the standard • The progress of production and assembly projects is of living, resulted from economic growth. Main factors still slow, unsatisfactory due to the impact of ineffective that enable rapid growth is THACO Chu Lai industrial O site clearance complex, Nam Anh industrial park and North Chu Lai T • Challenges in administrative procedure reform and industrial park. These industrial parks will be the developing high-quality human resources flagship of Quang Nam economy, attract more investors in relative industries • Automobiles consumption in Vietnam central remains low, this create a high transportation cost to bring • Localization rate has chance to increase due to products to customers in big cities in the North and mechanical supporting industries among Chu Lai South
VIETNAM AUTOMOBILES MARKET REPORT 52 ENTRY LANDSCAPE 2.1. Domestic auto parts manufacturers
Automotive designed capacity in Vietnam Unit: thousand units p.a.
Existing capacity Planned new capacity Expected total capacity OEMs 2019 2020 2025
Thaco 207 120 327
TC Motor 102 150 252
Honda 10 10 20
Toyota 50 20 70
VinFast 250 250 500
Total 619 550 1,169
Source: VIRAC
Total designed capacity stays at 619,000 units p.a. with the commercial launching of VinFast and Thaco Luxury car plant in May 2019. The industry is expected to witness a surge by 550,000 units p.a. in designed capacity by 2025.
VIETNAM AUTOMOBILES MARKET REPORT 54 2.1. Domestic auto parts manufacturers
Projected capacity of some automobile assembly plants, 2018 – 2020
Localization Plants Capacity Investment Location Plans rate
Chu Lai • Completion of phase 1: 4/2018 50,000 Truong Industrial • Production of tires and other components will increase the Mazda plant units USD 500 million 18% Hai JSC Zone localization rate of 40% (phase 1) (Quang Nam) • Export to Myanmar, Cambodia, Philippines
• Completed in mid-2019 • Total production of tires and other components will increase Thanh Cong Hyundai Thanh 12,000 Gia Vien USD 500 million 19% the localization rate to 40% Group Cong plant units/year (Ninh Binh) • To become a Hyundai Motor Manufacturing Center in South East Asia
• Completed in 2025 • USD 3.5 billion Dinh Vu-Cat • Phase 1: USD1-1.5 billion Hai • To launch electric vehicles after 12 months, and launch cars 500,000 after 24 months Vingroup VinFast plant • Credit Suisse AG Economic 60% units/year sponsors USD 800 Zone (Hai • To contribute to Hai Phong budget: USD 860 million Phong) million • To become the leading car manufacturer in Southeast Asia
•The project is divided into two phases: phase 1 is expected to Huyndai Gian Khau be completed in June 2022, phase 2 will be completed in June Thanh Huyndai Thanh 100,000 Industrial 2025 Cong and Cong 2 units/year USD 138 million 40% Zone (Ninh Huyndai (HTMV2) •Production and assembly on modern lines were transferred Binh) Motor from Hyundai Motor and leading partners in the field of high- tech mechanical engineering
VIETNAM AUTOMOBILES MARKET REPORT 55 2.1. Domestic auto parts manufacturers
Some typical models of Thaco Auto THACO Truck Truong Hai Auto Corporation (Thaco) was founded on April 29, 1997 by Tran Ba Duong, and has a total of about 20,000 staff members. As one of the leading and largest automakers in Vietnam, THACO has an A-to-Z value chain ranging from product R&D, auto parts manufacturing to auto assembly, logistics, THACO Bus distribution and retail. The company is now offering a wide range of products: trucks, buses, passenger cars, and special-purpose vehicles from mid-range to luxury segments which have successively earned high sales and market shares in the domestic market over the Units Sales volume of Thaco, 2014 – 9M/2020 years. Sales volume of Thaco by brands, 120,000 112,847 100% Units 9M/2019 – 9M/2020 Thaco Chu Lai Mechanical and Automotive 89.9% 96,127 30,000 100,000 80% Industrial Park in the central province of 89,602 91,700 Quang Nam is considered the largest hub of 80,421 60% 25,000 80,000 automotive manufacturing and supporting 20,000 40.3% 59,709 40% industries in Vietnam. It is home to 32 60,000 15,000 companies and units, including automotive 42,339 20% assembly plants, automotive parts factories 40,000 7.3% 0% 10,000 and mechanical complexes, Chu Lai port and -4.6% 20,000
logistics units, road transport and shipping -20.6% -20% 5,000
20,405 21,081 19,444 24,569 2,277 2,755 17,043 17,150 1,613 540 companies, construction & investment 0 -40% 0 companies, THACO College and other support 2014 2015 2016 2017 2018 2019 9T/20209M/2020 Thaco Kia Thaco Peugeot Thaco Bus Thaco Mazda Truck units. Sales Growth Source: VIRAC, VAMA 9M/2020 9M/2019
VIETNAM AUTOMOBILES MARKET REPORT 56 Financial statement
INCOME STATEMENT TRUONG HAI AUTO CORP. (THACO) Unit: USD 2018 2019 Net sales 1,964,570,948 1,917,285,460 BALANCE SHEET Cost of goods sold 1,879,665,003 1,829,660,351
Unit: USD 2018 2019 Gross margin 84,905,945 87,625,108 Income from financial activities 271,729,344 192,659,293 A, CURRENT ASSETS 795,451,535 656,360,001 Expenses from financial activities 21,703,512 63,470,320 I, Cash and cash equivalents 4,082,367 4,000,222 Interest expenses 8,832,025 28,673,725 II, Short-term investment 110,328,634 8,214,879 Selling expenses 31,276,332 45,374,361 III, Short-term receivables 522,122,362 549,386,339 Administration expenses 31,727,402 35,397,166 1, Accounts receivable from customers 74,765,140 68,822,592 Profit from operation 271,928,044 136,042,554 IV, Inventories 142,840,630 77,098,036 Profit before tax 276,125,550 136,642,624
B, LONG-TERM ASSETS 1,199,195,849 1,870,788,632 Current income tax expenses 3,844,064 80,355 -312 -3,904,613 1, Long-term receivable 1,646,935 352,235,593 Income tax expenses is deferred Net profit after tax 272,281,798 140,466,882 2, Fixed assets 221,044,175 251,131,840
TOTAL ASSETS 1,994,647,384 2,527,148,632 CASHFLOW STATEMENT
Unit: USD 2018 2019 A, LIABILITIES 828,086,816 1,137,166,342 I, Cash flows from operating activities I, Short-term liabilities 827,908,243 966,854,777 Cash flows from operating activities 121,631,303 49,518,987
1, Short-term loans and debts 436,884,151 554,681,879 II, Cash flows from investment activities -231,448,103 -397,120,149 2, Taxes payable to State Treasury 1,296,425 2,290,061 Cash flows from investment activities III, Cash flows from financial activities II, Long-term liabilities 178,574 170,311,565 Cash flows from financial activities 1,698,419 -82,017 1, Long-term loans and debts - 170,131,111 Effects from exchange rate difference 2, Science and technology development fund 145,944 171,650 Net cash flows during the fiscal year 4,082,367 4,000,222 B, EQUITY 1,166,560,568 1,389,982,290
TOTAL LIABILITIES AND OWNER'S EQUITY 1,994,647,384 2,527,148,632
*Exchange rate: USD/VND = 23,230
VIETNAM AUTOMOBILES MARKET REPORT 57 2.1. Domestic auto parts manufacturers
TYPICAL MODELS
TC Motor is formerly known as Thanh Cong Mechanical Co., Ltd and was Huyndai Kona Huyndai i10 established in 1999, with a vision to become the leading corporation in the region. From the early beginning, TC MOTOR has relied on internal resources to Huyndai Accent Huyndai Elantra expand and grow strongly, and to become a typical business with important contributions to the Vietnamese automotive industry. Huyndai Tucson Huyndai Santafe In 2009, Thanh Cong Group became an official partner with Hyundai Group in the field of distributing Hyundai passenger cars in Vietnam. After 10 years of cooperation, Units Sales volume of TC Motor, 2015 – 9M/2020 expansion and joint ventures, Thanh Cong 90,000 106.3% 120% Group has made Hyundai become one of 80,000 100% the leading automotive brands in Vietnam. 70,000 80% In the first 9 months of 2020, Hyundai car 60,000 60% sales reached 49,200. With the distribution 50,000 34.8% 25.3% 40% channel of 81 dealers, all car models 40,000 20% produced and distributed by TC MOTOR 30,000 dominate their segments. Especially, Thanh 20,000 -15.4% 0% Cong Group has shifted its structure from 10,000 -20% 27,000 36,400 30,800 63,526 79,568 49,200 importing the whole cars to nearly 100% 0 -40% 2015 2016 2017 2018 2019 9M/2020 assembly production. Sales Growth
Source: VIRAC VIETNAM AUTOMOBILES MARKET REPORT 58 Financial statement
INCOME STATEMENT HYUNDAI THANH CONG VIETNAM JSC. Unit: USD 2018 2019 Net sales 1,258,784,915 1,859,108,233 BALANCE SHEET Cost of goods sold 1,214,952,882 1,642,321,232
Unit: USD 2018 2019 Gross margin 43,832,033 216,787,002 Income from financial activities 5,010,537 9,004,550 A, CURRENT ASSETS 198,657,445 357,399,695 Expenses from financial activities 3,629,608 4,630,809 I, Cash and cash equivalents 30,889,200 34,198,129 Interest expenses 2,777,508 4,043,473 II, Short-term investment 58,619,037 98,527,295 Selling expenses 15,333,652 22,001,535 III, Short-term receivables 70,489,155 192,777,285 Administration expenses 541,074 831,699 1, Accounts receivable from customers 42,035,411 73,247,463 Profit from operation 29,338,236 198,327,508 IV, Inventories 33,754,871 31,896,985 Profit before tax 28,786,710 198,142,322
B, LONG-TERM ASSETS 81,447,252 83,037,150 Current income tax expenses 2,531,908 17,213,814 - - 1, Long-term receivable - - Income tax expenses is deferred Net profit after tax 26,254,802 180,928,508 2, Fixed assets 68,988,182 71,389,491
TOTAL ASSETS 280,104,697 440,436,845 CASHFLOW STATEMENT
Unit: USD 2018 2019 A, LIABILITIES 127,329,920 115,289,307 I, Cash flows from operating activities I, Short-term liabilities 127,329,920 115,289,307 Cash flows from operating activities -26,939,586 62,890,094
1, Short-term loans and debts 13,331,183 45,630,650 II, Cash flows from investment activities -42,903,957 -43,225,479 2, Taxes payable to State Treasury 2,977,773 14,316,906 Cash flows from investment activities III, Cash flows from financial activities II, Long-term liabilities - - Cash flows from financial activities 60,787,405 -16,351,129 1, Long-term loans and debts - - Effects from exchange rate difference - - 2, Science and technology development fund - - Net cash flows during the fiscal year -9,056,138 3,313,486 B, EQUITY 152,774,776 325,147,537
TOTAL LIABILITIES AND OWNER'S EQUITY 280,104,697 440,436,845
*Exchange rate: USD/VND = 23,230
VIETNAM AUTOMOBILES MARKET REPORT 59 2.1. Domestic auto parts manufacturers
TYPICAL MODELS
Honda was established in 1948 in Japan and is one of the most valuable brand in the world (Forbes' annual ranking of the world's most valuable brands). The company's global strategy is to supply products of the highest quality yet at a reasonable price for worldwide customer Honda City Honda Civic Honda CR-V Honda City satisfaction.
Honda Vietnam was established in 1996 as a joint venture between 3 partners, Japan Honda Honda Vietnam's strategy Motor Company (42%), Thailand Asian Honda Units Sales volume of Honda Vietnam, 2014 – 9M/2020 Motor Company (28%), and Vietnam Engine One of the business strategies of and Agricultural Machinery Corporation (30%) 35,000 33,102 140% Honda Motor Vietnam is to provide to manufactures two main products: 123.3% 30,000 120% products with advanced, durable and motorcycles and automobiles. In March 1998, 27,099 fuel-saving technology in order to Honda Vietnam inaugurated the first factory 25,000 100% optimize the value for customers. In manufacturing motorcycles, and in March 2005, Vietnam, most Honda models use new I- Honda Vietnam officially received the license 20,000 80% 16,520 VTEC technology engines combined with from the Ministry of Planning and Investment to 15,000 60% continuously variable transmission (CVT) allow the production and assembly of 12,134 11,501 gearboxes, which give the ability to automobiles in Vietnam with a modern factory 10,000 8,312 38.4% 40% operate smoothly, save fuel and be and assembly line in Vinh Phuc with the 6,492 28.0% environmentally friendly. capacity of about 10,000 vehicles/year. Honda 5,000 22.2% 20% Vietnam currently offers passenger cars such as Every year, Honda Vietnam organizes 5.5% Honda City, Honda CR-V, and import Honda 0 0% safe driving programs and experiences 2014 2015 2016 2017 2018 2019 9M/20209T/2020 Accord and Honda Civic lines to fully meet the new models to help consumers to Sales Growth appreciate the most authentic Honda needs of Vietnamese customers. Source: VIRAC, VAMA products in Vietnam. VIETNAM AUTOMOBILES MARKET REPORT 60 Financial statement
INCOME STATEMENT HONDA VIETNAM CO., LTD Unit: USD 2018 2019 Net sales 4,590,351,458 4,666,103,683 BALANCE SHEET Cost of goods sold 3,204,162,355 3,247,936,527
Unit: USD 2018 2019 Gross margin 1,386,189,103 1,418,167,156
A, CURRENT ASSETS 1,480,795,400 1,502,461,375 Income from financial activities 53,618,656 56,512,532 Expenses from financial activities 23,072,644 18,618,679 I, Cash and cash equivalents 1,069,730,078 1,149,107,065 Interest expenses - - II, Short-term investment - - Selling expenses 187,367,122 186,306,205 III, Short-term receivables 65,153,628 65,022,110 Administration expenses 217,805,692 227,646,541 1, Accounts receivable from customers 61,413,411 60,864,709 Profit from operation 1,011,562,302 1,042,108,262
IV, Inventories 296,972,041 252,436,271 Profit before tax 1,009,396,961 1,041,379,212
B, LONG-TERM ASSETS 279,678,616 307,060,506 Current income tax expenses 177,475,581 167,545,921
1, Long-term receivable 95,576 250,568 Income tax expenses is deferred -3,801,255 1,782,098 Net profit after tax 835,722,635 872,051,193 2, Fixed assets 207,077,119 211,757,301
TOTAL ASSETS 1,760,474,016 1,809,521,881 CASHFLOW STATEMENT
Unit: USD 2018 2019 A, LIABILITIES 871,614,551 884,333,858 I, Cash flows from operating activities I, Short-term liabilities 810,812,771 807,912,098 Cash flows from operating activities 791,264,600 923,607,416
1, Short-term loans and debts - - II, Cash flows from investment activities -42,510,918 -69,176,631 2, Taxes payable to State Treasury 45,683,476 47,987,847 Cash flows from investment activities III, Cash flows from financial activities II, Long-term liabilities 60,801,780 76,421,760 Cash flows from financial activities -842,351,926 -788,025,313 1, Long-term loans and debts - - Effects from exchange rate difference 2, Science and technology development fund 52,555,520 63,697,617 Net cash flows during the fiscal year -93,598,244 66,405,472 B, EQUITY 888,859,465 925,188,023
TOTAL LIABILITIES AND OWNER'S EQUITY 1,760,474,016 1,809,521,881
*Exchange rate: USD/VND = 23,230
VIETNAM AUTOMOBILES MARKET REPORT 61 2.1. Domestic auto parts manufacturers
TYPICAL MODELS
Toyota Motor Vietnam Co., Ltd (TMV) is an automobile Joint Ventures Camry Corrolla Vios Fortuner founded in September, 1995. The total investment capital was 89.6 million USD based on the capital contributions from Toyota Motor Corporation (70%), Vietnam Innova Hiace Engine and Agricultural Honda Vietnam's strategy Machinery Corporation - Sales volume of Toyota Vietnam, 2014 – 9M/2020 Units Price policy: Toyota apply higher prices than VEAM (20%) and KUO 90,000 25% 23.2% 79,328 competitors in every segment. Singapore Pte.Ltd (10%). 80,000 20.5% Marketing and branding policy: product exhibition, Since establishment, TMV has 70,000 65,856 20% incessantly developed not 59,355 promotion, discount, sponsorship, customer club, 60,000 57,036 only in sales but also in 50,285 15% annual participation in Vietnam Motorshow. In addition, 50,000 production scale. By now, 40,820 13.4% 41,109 the company also organizes a lot of customer care 40,000 11.0% TMV is holding the leading 10% activities, from year-end thank you party, golf position in the Vietnamese 30,000 tournament, car maintenance instruction courses, safe automobile market with the 20,000 5% driving... to bring company brand closer to consumers. 4.1% capacity of more than 30,000 10,000 Labour training policy: Toyota Vietnam applies a units/year (two working shifts 0 0% strategy of professional training and regular a day) and the accumulated 2014 2015 2016 2017 2018 2019 9M/20209T/2020 qualification testing, especially the company is very sales of TMV reaching more Sales Growth interested in and prioritizes the recruitment of local than 305,799 units. * Sales does not include Lexus Source: VIRAC, VAMA human resources.
VIETNAM AUTOMOBILES MARKET REPORT 62 Financial statement
INCOME STATEMENT TOYOTA MOTOR VIETNAM CO., LTD Unit: USD 2018 2019 Net sales 1,644,776,950 1,762,104,176 BALANCE SHEET Cost of goods sold 1,369,759,730 1,473,539,017
Unit: USD 2018 2019 Gross margin 275,017,220 288,565,159
A, CURRENT ASSETS 430,984,885 403,441,300 Income from financial activities 12,887,352 11,797,905 Expenses from financial activities 5,228,974 7,997,893 I, Cash and cash equivalents 91,283,047 86,493,221 Interest expenses - - II, Short-term investment 23,676,281 60,266,896 Selling expenses 31,835,132 29,605,613 III, Short-term receivables 22,101,661 24,471,038 Administration expenses 22,450,869 24,094,457 1, Accounts receivable from customers 11,042,491 14,412,112 Profit from operation 228,389,597 238,665,100
IV, Inventories 289,078,538 226,244,198 Profit before tax 226,448,156 238,567,690
B, LONG-TERM ASSETS 56,607,642 65,142,735 Current income tax expenses 46,051,548 48,836,896
1, Long-term receivable 275,339 216,289 Income tax expenses is deferred -644,923 1,136,456 Net profit after tax 181,041,532 188,594,338 2, Fixed assets 50,878,785 56,007,224
TOTAL ASSETS 487,592,527 468,584,034 CASHFLOW STATEMENT
Unit: USD 2018 2019 A, LIABILITIES 242,424,532 215,863,234 I, Cash flows from operating activities I, Short-term liabilities 236,844,898 203,766,088 Cash flows from operating activities 25,988,893 224,113,575
1, Short-term loans and debts - - II, Cash flows from investment activities -33,935,716 -47,868,903 2, Taxes payable to State Treasury 50,130,924 38,685,113 Cash flows from investment activities III, Cash flows from financial activities II, Long-term liabilities 5,579,634 12,097,146 Cash flows from financial activities -133,822,876 -181,041,532 1, Long-term loans and debts - - Effects from exchange rate difference 2, Science and technology development fund 5,579,634 12,097,146 Net cash flows during the fiscal year -141,769,699 -4,796,860 B, EQUITY 245,167,995 252,720,800
TOTAL LIABILITIES AND OWNER'S EQUITY 487,592,527 468,584,034
*Exchange rate: USD/VND = 23,230
VIETNAM AUTOMOBILES MARKET REPORT 63 2.1. Domestic auto parts manufacturers
TYPICAL MODELS
VinFast was founded in 2017, and is part of Vingroup which is Vietnam’s biggest private VinFast Fadil VinFast President enterprise. The company aims to become the leading automobile and motorcycle manufacturer in Southeast Asia. It plays a key role in Vingroup’s vision to become an VinFast Lux A 2.0 VinFast Lux SA 2.0 international standard technology-industry- service conglomerate by 2028 with a focus on technology development and VinFast’s strategy application. Sales volume of VinFast, 5 – 9/2020 Units VinFast has bought in German technologies from BMW, VinFast will set up a manufacturing, 4,000 Italian design from Pininfarina, and auto parts from Bosch research, supplier park, and development and Siemens. When previous original equipment complex at a greenfield factory in the Dinh 3,500 manufacturers took about 60 months from design to Vu Economic Zone located in Cat Hai 3,000 production, VinFast reduces lead time to a mere 24 months District, Haiphong. The manufacturing plant by replacing the time-consuming clay remodification complex comprises 335 hectares and 2,500 process with digital modelling. The designs have been includes a Centre for Product Research & 2,000 selected by an online survey in which 60,000 people Development, Automobile Manufacturing participated. By proactively involving the general public, the Plant, Training Centre and Localization 1,500 company hopes to capitalize on national pride which should Area. From now to 2025 – 2030, most R&D 1,000 give the domestic consumer base the decisive push to is expected to be channeled towards purchase VinFast’s vehicles.
electric cars. VinFast diversified its product 500
3,626 2,161 1,156 2,170 1,364 2,214 1,577 1,494 1,515 1,307
682 323 467 339 355 282 337 308 804 scope in an attempt to compete with both 849 With an aggressive recruitment strategy, VinFast is 0 mid-high-level prices such as Mercedes- 5/2020 6/2020 7/2020 8/2020 9/2020 attracting top talents for CEO, managers and staffs. Some Benz, BMW, Audi, Lexus and electric key positions are taken by high-level managers from GM, Total sales Fadil Lux A2.0 Lux SA2.0 Bosch, Hoden. Notably, attractive packages are introduced models for lower segments. Source: VIRAC to hire a pool of skilled staff from Samsung. VIETNAM AUTOMOBILES MARKET REPORT 64 Financial statement
INCOME STATEMENT VinFast TRADING AND PRODUCTION CO., LTD Unit: USD 2018 2019 Net sales 12,032,396 263,754,378 BALANCE SHEET Cost of goods sold 13,932,562 450,197,482
Unit: USD 2018 2019 Gross margin -1,900,165 -186,443,104
A, CURRENT ASSETS 783,073,994 793,233,982 Income from financial activities 42,536,324 169,192,563 Expenses from financial activities 3,037,513 114,072,126 I, Cash and cash equivalents 100,712,355 41,546,981 Interest expenses - 100,436,713 II, Short-term investment - - Selling expenses 1,955,640 56,023,852 III, Short-term receivables 619,156,097 237,409,679 Administration expenses 25,706,908 61,850,015 1, Accounts receivable from customers 27,728,862 40,610,830 Profit from operation 9,936,097 -249,196,534
IV, Inventories 10,245,593 419,893,867 Profit before tax 7,455,569 -248,030,464
B, LONG-TERM ASSETS 1,562,131,994 3,101,466,849 Current income tax expenses 1,273,716 -
1, Long-term receivable 139,475,248 348,175 Income tax expenses is deferred - - Net profit after tax 6,181,852 -248,030,464 2, Fixed assets 162,849,177 2,738,351,205
TOTAL ASSETS 2,345,205,988 3,894,700,831 CASHFLOW STATEMENT
Unit: USD 2018 2019 A, LIABILITIES 1,264,204,405 3,060,911,552 I, Cash flows from operating activities I, Short-term liabilities 543,035,639 756,981,323 Cash flows from operating activities -98,431,703 -362,756,453
1, Short-term loans and debts 195,586,485 218,604,784 II, Cash flows from investment activities -1,566,860,805 -1,281,626,556 2, Taxes payable to State Treasury 10,558,744 17,963,512 Cash flows from investment activities III, Cash flows from financial activities II, Long-term liabilities 721,168,766 2,303,930,228 Cash flows from financial activities 1,760,841,675 1,584,876,726 1, Long-term loans and debts 721,168,766 2,303,930,228 Effects from exchange rate difference 2, Science and technology development fund - - Net cash flows during the fiscal year 95,549,167 -59,506,283 B, EQUITY 1,081,001,583 833,789,279
TOTAL LIABILITIES AND OWNER'S EQUITY 2,345,205,988 3,894,700,831
*Exchange rate: USD/VND = 23,230
VIETNAM AUTOMOBILES MARKET REPORT 65 2.1. Domestic auto parts manufacturers
Localization rate of key auto parts OEMs in Vietnam, 2019
Company’s average Passenger cars Truck Bus Target
15% - 18% 15 - 18% 35 - 45% 60% 60%
~12% 35% (Hyundai Accent) 40%
~25% 30% (Honda City) 40% 15% (Honda CR-V)
~20% 37% (Innova) 45%
Less than 10% Less than 10% (Fadil) 60%
Source: VIRAC VIETNAM AUTOMOBILES MARKET REPORT 66 Analysis of domestic tier-1 and tier-2 auto parts production
Breaking down the existing auto part suppliers by tier type, among 404 suppliers identified by JETRO and JICA experts, there are 83 first tier suppliers, 138 second and third tier suppliers, 5 aftermarket producers, and 178 are not classifiable. By supplier specialization, 61 firms supply motorcycle parts, 50 firms supply both motorcycle and automobile parts, 18 firms supply automobile parts, and 275 firms are not classifiable. By nationality, there are 177 Japanese, 136 Vietnamese, 57 Taiwanese, 14 South Korean, and the remains belong to Germany, Malaysia, USA, etc.
Suppliers by tier type Suppliers by specialization Suppliers by nationality Others South Korea 7% Motorcycle parts 3% 15% 1st tier Automobile parts Taiwanese 21% 5% 14% Unknown Japanese 44% Both, 12% 43% Unknown Vietnamese 2nd tier 68% 33% 34%
AMP 1%
1st tier 2nd tier AMP Unknown Motorcycle parts Automobile parts Both Unknown Japanese Vietnamese Taiwanese South Korea Others
AMP: Aftermarket producers Source: VIRAC, Synthesizing from JETRO’s and JICA’s list of local firms
• To meet the growing demand, an automotive assembly company needs at least 20 suppliers of various components. However, even big joint ventures like Toyota is not able to produce CBU vehicles in Vietnam because the number of enterprises engaged in manufacturing spare parts is too small.
• Automobile supporting industry only produces a number of components including components of chassis, car body, cabin cover, car door, tires, radiators, brakes, electric motors, shafts, wheel rims, etc. Therefore, the components and spare parts of automobiles are small in size, types and quantities.
• The majority of domestic firms in the automobile supporting industries only provide products to the domestic automobile assembly companies, while the FDI enterprises in the supporting industries only supply products to FDI automobile assembly companies.
VIETNAM AUTOMOBILES MARKET REPORT 67 Analysis of domestic tier-1 and tier-2 auto parts production
Technical skill is not a major problem of local tier-1 suppliers, but the key barriers for them to engage in the automotive supply chain are high cost, low management skills (production, quality, warehouse, human...), and their perception of safety, environment.
What car manufacturers expect from their potential suppliers include an updated and attractive business profile; cost and quality competitiveness; samples following to drawings; entrepreneur’s enthusiasm and perseverance; stable product quality, accurate tolerance; and ability to provide with different scales to different customers.
➔ Recommendations to potential suppliers: To become auto part suppliers and participate in automobile global supply chain, local businesses should:
• Take part in auto part supplier databases and business matching programs.
• Create attractive business profile.
• Improve productivity, cut costs, compete on price and quality.
• Improve management capability, and comply to the international norms of doing business.
• Obtain international certification for quality, environment.
VIETNAM AUTOMOBILES MARKET REPORT 68 10 Key tier-1 auto parts manufacturers
No. Company name Tax code Location Net sales 2019 (USD)
DENSO MANUFACTURING Lot E1, Thang Long Industrial Park, Kim Chung Commune, Dong Anh 1 0101210878 480,710,500 VIETNAM CO., LTD. District, Hanoi City
YAZAKI HAI PHONG VIETNAM Lot L, Nomura Industrial Park, Hai Phong, An Hung Commune, An 2 0200438947 428,302,997 CO., LTD Duong District, Hai Phong
SUMI-HANEL WIRING SYSTEMS Industrial Road 4, Sai Dong B Industrial Park, Thach Ban Ward, Long 3 0100113945 356,189,388 CO., LTD Bien District, Hanoi
VIETNAM PRECISION INDUSTRIAL Khai Quang Industrial Park, Khai Quang Ward, Vinh Yen City, Vinh 4 2500213190 168,585,158 NO.1 CO, LTD Phuc Province
TOYOTA BOSHOKU HANOI CO., No. 144, Tran Phu Street, Phuc Thang Ward, Phuc Yen Town, Vinh 5 2500152396 118,796,461 LTD Phuc Province
No. 18, Street 3, Vietnam - Singapore Industrial Park, Binh Hoa Ward, 6 GS BATTERY VIET NAM CO., LTD 3700255457 103,601,922 Thuan An Town, Binh Duong Province
HARADA INDUSTRIES VIETNAM 7 3600243024 Lot A1, Long Binh EPZ, Bien Hoa City, Dong Nai 84,305,847 CO., LTD
HANOI PLASTICS JOINT STOCK 8 0100100858 Group 12, Phuc Loi Ward, Long Bien District, Hanoi 51,837,654 COMAPY
Lot 36, Quang Minh Industrial Park, Quang Minh Town, Me Linh 9 INOAC VIETNAM CO., LTD 2500236896 50,719,875 District, Hanoi
SUMMIT AUTO SEATS INDUSTRY 10 0101841425 Noi Bai Industrial Park, Soc Son District, Hanoi 2,391,905 CO., LTD
*Exchange rate: USD/VND = 23,230
VIETNAM AUTOMOBILES MARKET REPORT 69 10 Key tier-1 auto parts manufacturers
Tier-1 suppliers Overview Products Location
Denso Manufacturing Vietnam Co., Ltd was established on October 4, 2001 (the System control Hanoi Denso Manufacturing Vietnam Co., Ltd. official time of receiving the investment license) in Thang Long Industrial Park, Dong component Anh, Hanoi, Vietnam. Since establishment, DENSO Vietnam has always focused on (Pedal, Valve environmental protection in all business activities and working towards sustainable switching) development. The company has received ISO 14001 certificate in 2004.
Yazaki Hai Phong Vietnam is a subsidiary of the Yazaki Group, Japan. Yazaki Electric Wire Hai Phong Yazaki Hai Phong Vietnam Co., Ltd Group is a global business with 596 factories and branches in 46 countries around the System world. In Vietnam, Yazaki Hai Phong provides the electric wire system for cars. The company is also one of the leading factories in terms of quality, product prices, and on-time delivery to customers in Vietnam.
Sumi- Hanel Wiring System Co., LTd is a joint venture between Hanel and Electric Wire Hanoi Sumi-Hanel Wiring Systems Co., Ltd Sumitomo Corporation (Japan), specializing in manufacturing electric wires for System automotive, motorbike and electronic industries. The Company was established under the Investment License No. 1588/GP dated 11 June 1996 issued by the Ministry of Planning and Investment. Currently, Sumi- Hanel is operating with 5,000 employees in Sai Dong B Industrial Zone, Hanoi. The company's products are highly valued for quality and technical safety. With the advantage from the brand of Hanel MTV Co., Ltd., Sumi-Hanel Wiring System Co., Ltd has received the trust of many partners in the electronics and automobile industry both in and outside the country.
Established in 2001, Vietnam Precision Industrial No.1 Co., Ltd. manufactures and Stamping part, Vinh Phuc Vietnam Precision Industrial No.1 Co, supplies metal fabrication parts to various reputable companies including Honda, Chassis frame Ltd Ducati and Ford. VPIC1 has obtained multiple ISO certificates and grown to a assy, Side step, company with approximately 3,500 employees. VPIC1 is part of Eurocharm Hunger seat assy Group which primary operates in Taiwan. Since 1974, the Group has been focusing on delivering the best metalworking result with the most reliable quality.
VIETNAM AUTOMOBILES MARKET REPORT 70 10 Key tier-1 auto parts manufacturers
Tier-1 suppliers Overview Products Location
Toyota Boshoku Hanoi Co., Ltd Toyota Boshoku group is one of the world's premium interior systems suppliers and Seats and Vinh Phuc filter manufacturers, develops and produces interior components, unit components with the interior main office in Japan. Toyota Boshoku Asia (TBAS) employ over 11,000 team members in about components, 20 locations throughout Thailand, Malaysia, Philippines, Taiwan, Vietnam. TBAS group is a Carrier sub- premier manufacturer of automotive interior systems, which include seats, door trims, assays /Spare headliners, substrate, and carpet in addition to air and oil filters for a variety of customers. wheels, Floor Carpets Toyota Boshoku Hanoi Co., Ltd is established on 06/26/2008, with head office located in Phuc Yen City, Vinh Phuc Province, Vietnam.
GS Battery Viet Nam Co., Ltd. GS Battery VietNam Co., Ltd is a company 100% foreign-owned capital, a joint venture Battery Binh between GS-Yuasa Corporation which is the No. 1 biggest lead-acid batteries manufactures in Asia and Mitsubishi Corporation which is the biggest trading conglomerate in Japan. The Duong company was established on May 12th,1997, and began its operation and business activities in 1999. Market share:
- No 1 position in Vietnam for the original equipment market for famous manufacturers such as Toyota, Honda, Mercedes- Benz, Yamaha, Mitsubishi, Piaggio. - No 1 position in Vietnam for the replacement market of motorcycle and automotive batteries.
Harada Industries Vietnam Co., HARADA has been delivering automotive antennas since 1957 with the Lock Antenna, a Ltd. Attenna Dong Nai radio receiving automotive antenna. Since then, they have advanced into a world-class supplier occupying a high share of OEM supplies for global automakers. The company provides customers a clear solution on antenna and surrounding technologies meeting the customer and market needs in response to the fast moving world of the automotive industry.
VIETNAM AUTOMOBILES MARKET REPORT 71 10 Key tier-1 auto parts manufacturers
Tier-1 suppliers Overview Products Location
Hanoi Plastics Joint Stock Hanoi Plastics Joint Stock Company (HPC) was established in 1972, headquartered in Long Comapy Plastics part Hanoi Bien, Hanoi and became a member company of An Phat Holdings - Plastic Plastic Group Art from the end of 2018. HPC is equipped with modern production lines and equipment systems imported from the US, Western European countries, Japan and some new industrial countries with mechanized qualifications and relatively high automation.
Inoac Vietnam Co., Ltd INOAC group were founded in 1926, and starts their business by producing tires and tubes for Rubber part, Hanoi bicycles. Since then, they have created new materials and products one after another, Dam/ Assays including launching Japan’s first polyurethane production operation.
INOAC Vietnam is one of the overseas subsidiaries of INOAC group, which focuses on manufacturing rubber, polyurethane and developing their applications such as automotive, electric products, office automation equipment, industrial machine, garment, furniture.
Summit Auto Seats Industry Summit Auto Body Industry Co., Ltd. or "SUMMIT" was established in 1986 and is one of the Co., Ltd Sunviso, Hanoi largest suppliers in Thailand's automotive industry. The ability to produce its own tooling and R&D combined with a constant production enhancement has led SUMMIT to the leading position. All Headlining SUMMIT's factories have passed IATF 16949:2016 , which is the latest standard in the industry.
VIETNAM AUTOMOBILES MARKET REPORT 72 2.2. Entry barriers - Challenges for manufacturers
• The small domestic vehicle market does not encourage the development of auto parts industry: Among the existing suppliers, more than 90% are FDI enterprises, only a few local suppliers can participate in the supply chains of auto manufacturers in Vietnam. Compared to Thailand, the number of suppliers in the Vietnam’s automobile industry is too little. Regarding the tier-1 suppliers in 2019, Thailand has nearly 700 enterprises, but Vietnam has only 83 suppliers.
• The condition of more number of assemblers sharing smaller and more scatter size makes Vietnam harder to develop supplier networks: The local parts available for auto assemblers are normally labor intensive, simply produced, bulky and heavy parts, such as auto chairs, glasses, tires, wheels, etc.
• Vietnam is seeing a major shortage of skilled labor: Only 12% of Vietnam’s 57.5 million-strong workforce are highly skilled, according to recruitment firm ManpowerGroup. A number of Vietnam human capital index rankings is quite low, including know-how and development and education. These limitations can certainly offset any savings in labor costs to make Vietnam a less attractive for many manufacturers since it will be hard for them to find quality labor force to support the automotive industry.
• Price:
➢ Low orders quantity due to small car sale volume
➢ Reliance on imported raw materials (must purchase raw materials from suppliers appointed by car manufacturers)
➔ High product selling price
• Capability:
➢ Quality management system requirement
➢ Low technical skill
➢ Lack of experience in producing high end products
➢ Weak R&D capacity
➢ Lack of funding sources to purchase modern facilities
➢ Management capacity (late delivery, etc.)
➔ Difficulties to meet high technical requirements from car manufacturers.
VIETNAM AUTOMOBILES MARKET REPORT 73 2.2. Entry barriers - Key attractive points of Vietnamese automobiles industry
• High potential automobile consumption market
➢ Vietnam’s automobile market has unique characteristics, which differentiates from those of other ASEAN countries: Vietnam has two major markets, Hanoi and Ho Chi Minh City, but others have only one big market in capital city (Indonesia may have two, Jakarta and Surabaya). In Vietnam, potential market seems to have a wider distribution, not only in Hanoi and Ho Chi Minh City, but also in other big cities like Hai Phong, Da Nang. These market characteristics combining with other factors, i.e. demographic dividend, infrastructure, GDP per capital growth will make Vietnam to become a high potential for automobile market in coming years.
➢ High saving rate among family: Average income of a typical family has been increasing year on year, in contrast spent per month has the same trend but at a much lower speed. Therefore, savings has been increased for large spent on houses and expensive stuff like autos.
➢ Loan outstanding balance for individual’s consuming has steady growth speed, reached USD 63.9 billion in 2019.
Vietnam loan outstanding balance, 2012-2018 USD Average income and spent per month, 2010 – 2019 USD billion 200 70 80% 180.8 67.03% 180 166.9 65.35% 60 70% 160 133.4 60% 140 50 116.6 113.5 109.6 43.86% 50% 120 40 92.9 40% 100 86.1 81.3 30 80 69.0 25% 59.7 30% 52.1 60 20 20% 40 9.53% 10 20 10% 11.75 19.63 28.24 46.69 58.37 63.93 0 0 0% 2010 2012 2014 2016 2018 2019 2014 2015 2016 2017 2018 2019
Average Income Spent per month Loan outstanding balance Growth *Exchange rate: USD/VND = 23,230 *Exchange rate: USD/VND = 23,230 Source: VIRAC, GSO Source: VIRAC, NFSC
VIETNAM AUTOMOBILES MARKET REPORT 74 2.2. Entry barriers - Key attractive points of Vietnamese automobiles industry
• Auto companies are increasing investments in supporting industries:
➢ On September 22, 2020, TC Motor began construction of the 340 ha Thanh Cong Viet Hung Complex for Automotive Supporting Industries in northern Quang Ninh Province. A spokesperson for the Ninh Binh-based auto firm believed that the complex would attract many companies in the auto ecosystem.
➢ Next to Quang Ninh is the VinFast plant that makes cars, motorbikes and electric bikes in the Dinh Vu-Cat Hai industrial zone in Hai Phong City. A third of the 335-ha plant is used to produce auto and motorbike parts.
➢ Truong Hai (Thaco) making large investments in supporting industries. It currently has 12 plants in the 1,200 ha Chu Lai-Quang Nam industrial zone making both internal and exterior parts for buses, trucks and cars; composite parts; automotive glass; air conditioners for trucks, buses and passenger cars; car body parts and more.
• Vietnam young and cheap labor forces:
➢ Vietnam have low labor costs. The country monthly minimum wages in 2019 vary by region from $125 to $180, with the highest rates in urban areas like Ho Chi Minh City and Hanoi. Besides, Vietnam’s minimum wage growth is showing signs of stability. Minimum wages increased by an average of 5.3% in 2019, a lower increase than in 2018 (6.5%) and 2017 (7.3%). The abundant low-wage labor force is one of the key attractive point in the initial stage of the Vietnamese automotive industry’s development.
• Taxes on automobiles and auto parts
➢ The Ministry of Finance has worked on a special consumption tax policy to submit it to the government, proposing to reduce or waive the tax on domestically made car components to help local automobile manufacturers cut costs.
➢ The Ministry of Industry and Trade (MoIT) has also proposed other support policies such as lower corporate income tax for the auto industry and its supporting industries.
➢ The Vietnamese central bank have also been considering policies to increase demand for cars, such as lower loan interest rates for buying domestically produced cars.
VIETNAM AUTOMOBILES MARKET REPORT 75 2.2. Entry barriers - Proposals of entry strategy for Korean auto parts manufacturers
Reason that urges South Korean investors to pour money into projects on making car parts in Vietnam: • Vietnam’s new regulations, including Decree 116 that tightens control over imported automobiles, “positively influence” South Korean auto firms’ investment decisions.
• The saturation of the world market which has led to a drop in exports, domestic sales and manufacturing in South Korea. According to a report by the Korea Automobile Manufacturers Association (KAMA), the country made 2,162,000 vehicles in the first six months of 2017, a 1.5 % year-on-year decline against 2016, marking the lower production since 2010.
• The auto industry of South Korea owns an effective supply chain which its leading firms can take of advantage to reach out to international markets.
• Vietnam’s strategic geographic location: many Korean auto part manufacturers' major goal is selling automobile parts to Southeast Asia, which may include Vietnam’s VinFast - the automotive arm of conglomerate Vingroup. So the factories, one in place, would help Korean investors reduce the cost and raise the convenience for supplying their products in the Southeast Asian market.
General strengths of Korean auto parts manufacturers: • The auto industry of South Korea owns an effective supply chain which its leading firms can take of advantage to reach out to international markets.
• Investment from South Korea in Vietnam remains strong. The Northeast Asian country is the second-largest source of foreign direct investment (FDI) for Vietnam in the first six months of this year, second only to Japan. During the reviewed period, South Korean firms invested US$5.06 billion, or 24.9% of total investment to the country.
• Korean is increasing investment in Vietnam to boost supporting industry: VITASK - a cooperation project between the South Korean Ministry of Trade, Industry, and Energy and the Vietnamese Ministry of Industry and Trade, was officially launched on December 11, 2020, in Hanoi, to help Vietnamese businesses in the automotive and electrical-electronic industries improve their capacity and deeply participate in the global supply chain.
• Korea has experience in developing a successful auto industry and makes it a vehicle for economic growth. Korean auto parts manufacturers can draw lessons for the development of auto industries in latecomer countries like Vietnam, and offer measures that can use, drawing on the successes and failures of the Korean auto industry’s development experience.
VIETNAM AUTOMOBILES MARKET REPORT 76 2.2. Entry barriers - Proposals of entry strategy for Korean auto parts manufacturers
For the market entry strategy, Korean auto part makers may start with “pass through” first to test the market demand and then set up factories later on.
Key requirements for such pass through collaboration are as follows:
• Be an existing auto part suppliers for OEMs’ overseas plants
• Have a local partners with an existing manufacturers plant in Vietnam
• Providing key input materials or parts for further processing in Vietnam and supplying to OEMs to test the market demand.
Suitable options of market penetration:
Collaboration with FDI auto parts markers
➢ Collaboration opportunity: low
➢ Collaboration type: Become their potential suppliers (preferred for Korean auto part makers have manufacturing plants in Vietnam already)
➢ Most of tier-1 auto part companies in Vietnam are FDIs who produce auto parts upon the orders from their parent companies or foreign customers. Majority of their output products are exported while small portions are supplied to local car manufacturers.
Collaboration with local auto part makers
➢ Collaboration opportunity: high
➢ Collaboration type: R&D co-operation or become their clients or suppliers
➢ Local companies are open for cooperation with new partners and clients. However, most of them are small-scale businesses and able to provide small and simple auto parts only. They would be good candidates for Korean auto parts makers in pass through collaboration since they have existing manufacturing plants in Vietnam and are open to cooperate.
VIETNAM AUTOMOBILES MARKET REPORT 77 2.2. Entry barriers - Proposals of entry strategy for Korean auto parts manufacturers
Information exchange between car Step 1 manufacturers and auto part makers
Site visit by car manufacturers to assess Step 2 auto part supplier’s production capability
Car manufacturer provides standard technical Step 3 drawings and technical requirements General procedure of entry strategy Auto part company provides sample & quotation Step 4
Sample product verification & contract Step 5 negotiation
Archive licenses and sign the contract Step 6
VIETNAM AUTOMOBILES MARKET REPORT 78 2.2. Entry barriers - Proposals of entry strategy for Korean auto parts manufacturers
Request for quotation and Searching for suppliers Visit Order sample
• Request for quotation: if a • Order for mass production: If • Searching for potential suppliers: • First visit: The purpose of the possibility of collaboration is the second visit achieved Regularly, the car manufacturer first visit is to confirm the visible, the car manufacturer will positive results, the car usually looks for new auto part information gathered from contact to request for quotation manufacturer will consider suppliers through databases profile screening, preliminarily for the products they offer. After making the first order for mass developed by consulting assess the ability to meet receiving the quotation, if it is production. It normally takes companies or government requirements on safety, reasonable, they will send a about 1.5 to 2 years from this organizations, trade fairs, or the management systems, quality request for sample production. introduction of the existing assurance, etc. date until the launching date • Request for sample suppliers or employees. of the first vehicle assembled • Second visit: If the samples production: There can be with their products. • Profile screening: When a meet the requirements, the car several ways to request for Throughout this period time, potential supplier is identified, the manufacturer will require a sample production. The car the car manufacturer and car manufacturer will look at its second visit. The purpose of this manufacturer can send detailed suppliers still have to profile to collect necessary visit is mainly to confirm the blueprints, on which potential frequently collaborate, work information about main products, progress of improvements per suppliers will base on to together to ensure the quality size of the business, year of their recommendations in the produce molds and make and progress of work. establishment, main customers, first time, the readiness of samples. The car manufacturer equipment and technology in use, potential suppliers to become can also send a sample product, financial status, etc. If they find all their suppliers, as well as the and the potential suppliers conditions are satisfied, they will enthusiasm and passion of the should measure the sample to contact to make an appointment firms’ leaders. draw blueprints, making the for a factory visit. mold, and then produce a copied one.
VIETNAM AUTOMOBILES MARKET REPORT 79 2.3. Collaboration landscape
Key factors enable collaboration in Vietnamese automobiles industry
• Increasing demand for higher localization rate:
➢ The Ministry of Finance proposed a draft regulation on new special tax calculation for domestically-produced cars to encourage automotive makers to increase localization rate. Taxable price for domestically-produced automobiles with 9 seats or less will be exclusive of the value od the auto parts produced domestically, encouraging automotive makers to increase the localization rate and enhance price competitiveness of domestic assembled car.
➢ To enjoy the tax incentives from the regulation, car manufacturers are expected to increase their localization rate via the cooperation with domestic auto part suppliers.
• Local OEMs aims to increase their localization rate:
➢ Car manufacturers are aims to increase their localization rate to over 40% via further development of local supplier base. For example, Toyota Vietnam’s key focuses for localization in Vietnam include Seats, Body parts and Plastics auto parts.
➢ OEMs are leveraging existing motorcycle supplier base to find new auto part suppliers.
➢ Many OEMs in Vietnam are open for collaboration with Korean auto part suppliers such as Thaco Auto, Toyota Vietnam, Honda Vietnam, Ford Vietnam, etc.
VIETNAM AUTOMOBILES MARKET REPORT 80 2.3. Collaboration landscape
SWOT analysis for Vietnamese automobiles industry
• In the short term, vehicles assembled in Vietnam are • The connection between automobile cheaper than imported vehicles. However, in the manufacturing and supporting industries is weak. long run, with the current import tax reduction • The size of Vietnam's automobile market is schedule for cars, it is likely that imported cars will fragmented as car assemblers are disconnected. be priced close to domestically assembled ones S W • The automobile supporting industry is small • The advantages from geographic location will help which cannot stimulate the development of parts reduce costs and facilitate the supply of products to manufacturers. the markets in Southeast Asia.
• Vietnam is in a period of deep international • Consumers in Vietnam tend to wait for low- integration with a series of FTAs signed which will priced imported cars when the car import tax be a good opportunity for the country to join the from ASEAN is reduced to 0%. global supply chain and develop the supporting • There are many contradictions in the industry. O T development policies of the automobile • Living standard and income of the people are industry gradually increasing. Opportunities to develop for • Countries in the region have more competitive the auto industry are still abundant. price and higher localization rates than Vietnam.
VIETNAM AUTOMOBILES MARKET REPORT 81 SWOT analysis OEMs in Vietnam suitable for collaboration – VinFast
❖ Strengths: ❖ Weaknesses:
• The sound business and financial performance of Vingroup over the • The most serious challenge for VinFast is to compete with international years is a strong foundation for the company to confidently take up the new giants in both domestic and foreign markets. As a young brand with no challenge. proven track record, it will need to focus on the domestic market first, at least in the coming five to ten years, then looks to export its products. • The company’s business ecosystem in different sectors and its large customer base of about 5 million middle-class people provide the • VinFast will have to invest heavily in R&D capabilities and human company with a unique advantage in marketing its automotive products in resource development to internalize the imported technologies and the domestic market. The company can provide promotion packages with know-hows. VinFast’s technical teams are reportedly rather inexperienced additional benefits from its other businesses, such as health care or holiday and still unable to master these technologies, leading to their reliance on vouchers, or even discounts for housing products to lure new car buyers. consultants, especially AVL.
• Vingroup in general, and VinFast in particular, enjoy strong political • VinFast need to work with partners to establish facilities for backing from Vietnamese government authorities. It is an open secret manufacturing car components and spare parts to achieve the expected that Vingroup’s success in the real estate business is significantly indebted to localization ratio of 60 per cent. its political connections. These connections facilitated the group’s acquisition • In the initial stage, VinFast had to take a short cut by importing most of large, well-located land lots in major cities, mostly from state-owned of their technologies, know-hows, parts and components, but in the enterprises, to develop its real estate projects, which gave Vingroup a long run, failing to internalize these resources will cause the company to considerable advantage over its competitors. produce just another type of “Made in Vietnam” cars, and not the type of • Strong political support and VinFast’s importance to the local economy “Made by Vietnam” cars that the company wishes to develop. have led the VietnameseSgovernment to provide VinFast with various W preferential incentives.
• Nationalist sentiments is VinFast’s strength in the domestic market. Right from the beginning, VinFast wanted to mobilize nationalist sentiments as a means to connect with Vietnamese customers and to win government support, and capitalize on Vietnamese customers’ pride in driving a modern and quality national car.
VIETNAM AUTOMOBILES MARKET REPORT 82 SWOT analysis OEMs in Vietnam suitable for collaboration – VinFast
❖ Opportunities: ❖ Threats:
• The potential for the Vietnamese automotive market remains ample. The • In the domestic market, Vingroup will have to work hard to sell its cars to car ownership ratio in Vietnam is 16 cars/1,000 residents, significant lower customers who typically prefer Japanese brands and imported cars to than that of Malaysia (341/1,000), Thailand (196/1,000), and Indonesia domestic ones. (55/1,000). As a country of 94 million people with young demographics and a • In order to make its production more efficient, and to reduce car prices, fast expanding middle class, Vietnam is a promising market with significant Vingroup will need to increase its manufacturing scale. In this regard, the sale opportunities for VinFast and other automakers if they can cater to the small size of the domestic market is a major impediment. varied demands of local customers. • To change the country’s traffic culture, reduce air pollution and grow • As a new player in the industry, VinFast is no doubt facing many the automotive market, the Vietnamese government is likely to consider difficulties, but also enjoys certain benefits from being a latecomer: the gradually phasing out motorbikes in certain big cities, especially Hanoi and company can adopt new, advanced technological platforms or a forward- Ho Chi Minh City. However, this measure is not going to be feasible unless looking business strategy right from the beginning without having to deal local governments provide alternative public transport options for those who with legacy issues, decision to develop e-scooters and electric cars are cases cannot afford cars. in point. • The lack of infrastructure for cars is yet another challenge that not only • Appealing for investments from financial institutions and win the trust VinFast but also other automakers will have to face. Frequent traffic jams of its partners and suppliers: Vingroup has a good track record, esspecially and the lack of parking spaces have long discouraged car buyers in major asset management not only in automobile industry but also other sectors. cities. Vietnam will need to build more highways within and between cities • To the end of 2020, domesticallyOmanufactured or assembled automobiles and reserve more urban spacesTfor parking facilities if it wants to give a will receive a 50% reduction in registation fee, which is a huge opportunity boost to the automotive industry. for VinFast. • The large investment needed and the lack of a relevant technological base and of qualified human resources in Vietnam is another significant challenge.
VIETNAM AUTOMOBILES MARKET REPORT 83 SWOT analysis OEMs in Vietnam suitable for collaboration – Thaco
❖ Strengths ❖ Weaknesses
• Thaco is currently the leading company in the Vietnamese auto industry • Thaco is a domestic private manufacturing enterprise and a pioneer in terms of investment scale, capital resources, technology, number of brands in the automobile manufacturing and assembling industry - a young held, automobile segment and product consumption, etc. industry in Vietnam; therefore, its financial resources are inferior to those of competitors whose parent company is national corporations such as • Thaco owns the largest complex of modern automobile manufacturing Toyota, Mercedes-Benz, GM, and Ford. and assembling factories in Vietnam. This complex is built in Chu Lai Open Economic Zone, it is also considered as the largest mechanical manufacturing • Experience in management, production, access to modern production center in Vietnam with the main products being automobiles and all kinds of technologies, advanced management models, as well as the strength of auto parts. the brand are also inferior to that of big and long-standing companies such as Toyota and Ford. • Thaco has diversified products, serving quite a full range of segments on the market. In addition, the possession of modern technology and large • The technical level of the production team is not high, still requiring production scale helps Thaco create quality products with low prices (the a lot of training time. cheapest on the market among other prestigious car brands).
• The distribution system is strong and nationwide, so customer service is well- managed and prioritized.
• Cost of goods sold is cheap, due to tax incentives from the government. The government supporting operation activities within the industry and advantage from a centralized chain model help Thaco outperform other competitors. S W
• The ability to understand the needs of consumers and topography of regions across the country helps Thaco quickly improve car models in accordance with consumer preferences, terrain, and transportation systems.
84 VIETNAM AUTOMOBILES MARKET REPORT 84 SWOT analysis OEMs in Vietnam suitable for collaboration – Thaco
❖ Opportunities ❖ Threats
• The favorable geographical location of the factory complex, together • Intense competition in the automobile manufacturing industry: with the government’s preferential policies and political environment economic development and increase in consumer demand for cars will give Thaco the opportunity to expand production scale and complete the inevitably bring about stronger competition. self-contained production system, from the production of components • Although the technology is considered to be the most modern in and spare parts to assembly, distribution and repair services, customer Southeast Asia, compared to the general level of the world automobile service. manufacturing industry, THACO's technology is still much inferior. • Improvement of people’s living standard and the rise of Vietnamese • It is necessary to prioritize upgrading and improving technology, middle class help Thaco expand its business. improving efficiency and production scale to ensure stable • Government guidelines and policies on domestic consumption such as the development and steady growth. movement and slogan "Vietnamese people use Vietnamese goods" • Thaco faces challenges of training highly skilled workers who will be together with prehension of Vietnamese culture create a better image of directly in charge of the new advanced production technologies. Thaco in Vietnamese people’s mind. • Increasing gasoline prices, requirements for clean technology and environmentally friendly products are also a challenge for Thaco.
• Vietnam's automobile manufacturing industry has gradually become stable; opening Vietnam for integration with the world, tariff barriers and techniques for protection will Talso change. This will cause Thaco to lose O tax incentives.
85 VIETNAM AUTOMOBILES MARKET REPORT 85 Appendix: Financial Statement Financial statement
DENSO MANUFACTURING VIETNAM CO., LTD. INCOME STATEMENT Unit: USD 2018 2019 BALANCE SHEET Net sales 483,650,166 480,710,500 Unit: USD 2018 2019 Cost of goods sold 348,664,646 309,341,494 A, CURRENT ASSETS 144,412,013 138,760,285 Gross margin 84,002,294 79,850,984
I, Cash and cash equivalents 68,073,111 61,162,208 Income from financial activities 3,172,811 2,018,414 Expenses from financial activities 1,037,697 1,097,532 II, Short-term investment - - Interest expenses - - III, Short-term receivables 47,549,491 48,727,322 Selling expenses 20,107,139 16,744,983 1, Accounts receivable from customers 44,574,645 44,984,709 Administration expenses 9,432,226 9,024,107 IV, Inventories 27,472,692 27,477,098 Profit from operation 56,598,043 55,002,774 B, LONG-TERM ASSETS 54,989,332 59,097,658 Profit before tax 56,241,713 53,461,599 1, Long-term receivable 76,065 64,694 Current income tax expenses 8,740,199 8,766,780
2, Fixed assets 52,730,865 42,502,181 Income tax expenses is deferred -124,973 -219,012
TOTAL ASSETS 199,401,345 197,857,943 Net profit after tax 47,626,488 44,913,832
A, LIABILITIES 52,698,226 51,423,647 CASHFLOW STATEMENT
I, Short-term liabilities 49,843,542 50,265,922 Unit: USD 2018 2019
1, Short-term loans and debts - - I, Cash flows from operating activities Cash flows from operating activities 87,475,190 59,283,295 2, Taxes payable to State Treasury 2,427,544 1,624,972 II, Cash flows from investment activities 0 0 II, Long-term liabilities 2,854,684 1,157,725 Cash flows from investment activities -8,698,526 -19,221,626 1, Long-term loans and debts - - III, Cash flows from financial activities 0 0 2, Science and technology development fund 2,854,684 1,157,725 Cash flows from financial activities -60,083,319 -45,747,530 B, EQUITY 146,703,119 146,434,296 Effects from exchange rate difference 0 0 TOTAL LIABILITIES AND OWNER'S EQUITY 199,401,345 197,857,943 Net cash flows during the fiscal year 18,693,345 -5,685,861
*Exchange rate: USD/VND = 23,230
VIETNAM AUTOMOBILES MARKET REPORT 87 Financial statement
YAZAKI HAI PHONG VIETNAM CO., LTD INCOME STATEMENT Unit: USD 2018 2019 BALANCE SHEET Net sales 427,257,471 428,302,997 Unit: USD 2018 2019 Cost of goods sold 416,771,796 406,171,834 A, CURRENT ASSETS 140,020,777 136,458,693 Gross margin 10,485,675 22,131,163
I, Cash and cash equivalents 21,434,766 18,834,953 Income from financial activities 400,185 93,904 Expenses from financial activities 3,262,916 3,702,528 II, Short-term investment - - Interest expenses 2,925,341 2,694,248 III, Short-term receivables 63,379,448 58,668,325 Selling expenses 1,593,849 1,506,336 1, Accounts receivable from customers 63,184,402 58,603,711 Administration expenses 6,030,891 5,457,956 IV, Inventories 54,186,174 58,338,305 Profit from operation -1,796 11,558,247 B, LONG-TERM ASSETS 93,791,404 85,028,803 Profit before tax 206,130 11,221,152 1, Long-term receivable 70,933 69,603 Current income tax expenses 138,658 1,973,873
2, Fixed assets 80,985,694 74,263,413 Income tax expenses is deferred - -
TOTAL ASSETS 233,812,181 221,487,496 Net profit after tax 67,472 9,247,279
A, LIABILITIES 184,820,115 162,149,004 CASHFLOW STATEMENT
I, Short-term liabilities 172,319,632 151,731,594 Unit: USD 2018 2019
1, Short-term loans and debts 89,569,492 76,346,767 I, Cash flows from operating activities Cash flows from operating activities 3,771,828 19,116,401 2, Taxes payable to State Treasury 185,553 576,216 II, Cash flows from investment activities II, Long-term liabilities 12,500,483 10,417,410 Cash flows from investment activities -6,754,611 -5,321,297 1, Long-term loans and debts 10,257,905 8,396,358 III, Cash flows from financial activities 2, Science and technology development fund 2,242,578 2,021,052 Cash flows from financial activities 6,468,509 -16,711,724 B, EQUITY 48,992,066 59,338,492 Effects from exchange rate difference TOTAL LIABILITIES AND OWNER'S EQUITY 233,812,181 221,487,496 Net cash flows during the fiscal year 3,485,726 -2,916,620
*Exchange rate: USD/VND = 23,230
VIETNAM AUTOMOBILES MARKET REPORT 88 Financial statement
SUMI-HANEL WIRING SYSTEMS CO., LTD INCOME STATEMENT Unit: USD 2018 2019 BALANCE SHEET Net sales 356,189,388 399,114,540 Unit: USD 2018 2019 Cost of goods sold 338,289,795 378,095,867 A, CURRENT ASSETS 57,295,975 63,690,575 Gross margin 17,899,593 21,018,672
I, Cash and cash equivalents 1,462,995 2,397,541 Income from financial activities 1,079,956 1,275,609 Expenses from financial activities 952,707 563,150 II, Short-term investment - - Interest expenses 558,245 350,651 III, Short-term receivables 38,667,233 38,676,233 Selling expenses 4,425,900 5,397,762 1, Accounts receivable from customers 38,402,886 38,483,448 Administration expenses 5,339,240 6,121,430 IV, Inventories 16,173,203 20,031,816 Profit from operation 8,261,701 10,211,939 B, LONG-TERM ASSETS 32,076,132 28,669,569 Profit before tax 8,239,068 10,314,951 1, Long-term receivable 323,774 330,033 Current income tax expenses 1,224,382 1,470,209
2, Fixed assets 24,659,575 24,240,073 Income tax expenses is deferred -2,020 77,796
TOTAL ASSETS 89,372,107 92,360,144 Net profit after tax 7,016,707 8,766,946
A, LIABILITIES 66,092,481 65,426,204 CASHFLOW STATEMENT
I, Short-term liabilities 62,334,491 62,993,556 Unit: USD 2018 2019
1, Short-term loans and debts 14,984,143 10,945,435 I, Cash flows from operating activities Cash flows from operating activities 8,685,756 16,623,934 2, Taxes payable to State Treasury 697,551 1,945,768 II, Cash flows from investment activities II, Long-term liabilities 3,757,990 2,432,648 Cash flows from investment activities -9,776,638 -4,219,005 1, Long-term loans and debts III, Cash flows from financial activities 2, Science and technology development fund 1,881,331 2,207,974 Cash flows from financial activities -9,626 -11,525,076 B, EQUITY 23,279,626 26,933,940 Effects from exchange rate difference TOTAL LIABILITIES AND OWNER'S EQUITY 89,372,107 92,360,144 Net cash flows during the fiscal year -1,100,507 879,853
*Exchange rate: USD/VND = 23,230
VIETNAM AUTOMOBILES MARKET REPORT 89 Financial statement
VIETNAM PRECISION INDUSTRIAL NO.1 CO, LTD INCOME STATEMENT Unit: USD 2018 2019 BALANCE SHEET Net sales 146,365,632 168,585,158 Unit: USD 2018 2019 Cost of goods sold 122,360,886 140,633,670 A, CURRENT ASSETS 72,925,204 80,180,818 Gross margin 24,004,747 27,951,488
I, Cash and cash equivalents 13,262,424 21,584,174 Income from financial activities 3,402,945 2,477,866 Expenses from financial activities 253,291 552,040 II, Short-term investment 10,288,420 11,622,901 Interest expenses 106,309 306,575 III, Short-term receivables 25,996,151 23,388,358 Selling expenses 1,507,196 1,626,910 1, Accounts receivable from customers 22,608,053 22,291,480 Administration expenses 3,294,514 3,994,512 IV, Inventories 20,580,361 20,110,634 Profit from operation 22,352,690 24,255,893 B, LONG-TERM ASSETS 49,223,552 56,957,782 Profit before tax 22,518,475 24,867,980 1, Long-term receivable Current income tax expenses 4,550,664 4,033,424
2, Fixed assets 34,887,550 43,295,698 Income tax expenses is deferred
TOTAL ASSETS 122,148,756 137,138,600 Net profit after tax 17,967,811 20,834,556
A, LIABILITIES 38,558,511 32,713,799 CASHFLOW STATEMENT
I, Short-term liabilities 38,558,511 32,713,799 Unit: USD 2018 2019
1, Short-term loans and debts 6,924,338 12,902,753 I, Cash flows from operating activities Cash flows from operating activities 13,250,178 20,259,739 2, Taxes payable to State Treasury 1,345,661 357,644 II, Cash flows from investment activities II, Long-term liabilities Cash flows from investment activities -9,927,255 -17,919,957 1, Long-term loans and debts III, Cash flows from financial activities 2, Science and technology development fund Cash flows from financial activities -4,369,724 5,978,415 B, EQUITY 83,590,245 104,424,801 Effects from exchange rate difference TOTAL LIABILITIES AND OWNER'S EQUITY 122,148,756 137,138,600 Net cash flows during the fiscal year -1,046,801 8,318,197
*Exchange rate: USD/VND = 23,230
VIETNAM AUTOMOBILES MARKET REPORT 90 Financial statement
TOYOTA BOSHOKU HANOI CO., LTD INCOME STATEMENT Unit: USD 2018 2019 BALANCE SHEET Net sales 111,008,721 118,796,461 Unit: USD 2018 2019 Cost of goods sold 94,193,316 99,959,623 A, CURRENT ASSETS 29,796,323 31,787,754 Gross margin 16,815,406 18,836,838
I, Cash and cash equivalents 10,779,665 15,111,246 Income from financial activities 432,251 507,841 Expenses from financial activities - 26,335 II, Short-term investment - - Interest expenses III, Short-term receivables 11,621,152 10,621,589 Selling expenses 3,744,468 4,041,641 1, Accounts receivable from customers 11,440,257 9,306,911 Administration expenses 2,323,939 2,664,453 IV, Inventories 7,395,506 6,038,447 Profit from operation 11,179,250 12,612,250 B, LONG-TERM ASSETS 8,295,553 8,277,835 Profit before tax 11,186,964 12,617,160 1, Long-term receivable Current income tax expenses 2,323,261 2,614,875
2, Fixed assets 7,867,569 7,453,607 Income tax expenses is deferred
TOTAL ASSETS 38,091,876 40,065,589 Net profit after tax 8,863,703 10,002,285
A, LIABILITIES 11,204,039 11,139,307 CASHFLOW STATEMENT
I, Short-term liabilities 10,859,975 10,705,462 Unit: USD 2018 2019
1, Short-term loans and debts I, Cash flows from operating activities Cash flows from operating activities 8,026,509 13,756,349 2, Taxes payable to State Treasury 1,027,446 555,528 II, Cash flows from investment activities II, Long-term liabilities 344,065 433,846 Cash flows from investment activities -1,680,687 -1,488,957 1, Long-term loans and debts III, Cash flows from financial activities 2, Science and technology development fund 344,065 433,846 Cash flows from financial activities -5,208,782 -7,963,840 B, EQUITY 26,887,836 28,926,282 Effects from exchange rate difference TOTAL LIABILITIES AND OWNER'S EQUITY 38,091,876 40,065,589 Net cash flows during the fiscal year 1,137,041 4,303,552
*Exchange rate: USD/VND = 23,230
VIETNAM AUTOMOBILES MARKET REPORT 91 Financial statement
GS BATTERY VIET NAM CO., LTD INCOME STATEMENT Unit: USD 2018 2019 BALANCE SHEET Net sales 87,805,220 103,601,922 Unit: USD 2018 2019 Cost of goods sold 66,099,646 80,190,400 A, CURRENT ASSETS 47,623,640 47,536,017 Gross margin 21,705,575 23,411,522
I, Cash and cash equivalents 3,977,950 11,225,016 Income from financial activities 1,254,790 1,588,084 Expenses from financial activities 612,167 405,958 II, Short-term investment 25,942,316 19,328,455 Interest expenses III, Short-term receivables 3,964,381 5,465,096 Selling expenses 6,910,214 8,209,385 1, Accounts receivable from customers 3,143,910 3,695,192 Administration expenses 2,309,346 2,303,069 IV, Inventories 13,302,886 10,941,517 Profit from operation 13,128,638 14,081,194 B, LONG-TERM ASSETS 18,821,346 21,014,294 Profit before tax 13,140,399 14,096,093 1, Long-term receivable Current income tax expenses 2,404,167 2,703,312
2, Fixed assets 15,747,991 15,311,808 Income tax expenses is deferred
TOTAL ASSETS 66,444,986 68,550,311 Net profit after tax 10,736,232 11,392,781
A, LIABILITIES 8,195,609 9,644,385 CASHFLOW STATEMENT
I, Short-term liabilities 7,901,194 9,352,899 Unit: USD 2018 2019
1, Short-term loans and debts I, Cash flows from operating activities Cash flows from operating activities 11,152,678 15,238,647 2, Taxes payable to State Treasury 1,879,833 1,039,936 II, Cash flows from investment activities II, Long-term liabilities 294,415 291,486 Cash flows from investment activities -1,082,480 2,718,514 1, Long-term loans and debts III, Cash flows from financial activities 2, Science and technology development fund 294,415 291,486 Cash flows from financial activities -8,753,788 -10,736,232 B, EQUITY 58,249,377 58,905,926 Effects from exchange rate difference TOTAL LIABILITIES AND OWNER'S EQUITY 66,444,986 68,550,311 Net cash flows during the fiscal year 1,316,410 7,220,929
*Exchange rate: USD/VND = 23,230
VIETNAM AUTOMOBILES MARKET REPORT 92 Financial statement
HARADA INDUSTRIES VIETNAM CO., LTD INCOME STATEMENT Unit: USD 2018 2019 BALANCE SHEET Net sales 75,267,257 84,305,847 Unit: USD 2018 2019 Cost of goods sold 68,541,674 79,406,308 A, CURRENT ASSETS 22,457,996 22,874,404 Gross margin 6,725,583 4,899,539
I, Cash and cash equivalents 658,730 1,837,485 Income from financial activities 29,568 18,418 Expenses from financial activities 122,595 309,398 II, Short-term investment Interest expenses 103,467 249,264 III, Short-term receivables 10,010,488 10,522,806 Selling expenses 1,740,389 1,774,903 1, Accounts receivable from customers 9,812,072 10,483,168 Administration expenses 814,279 952,843 IV, Inventories 11,657,762 10,176,242 Profit from operation 4,077,887 1,880,814 B, LONG-TERM ASSETS 5,384,113 7,496,388 Profit before tax 4,148,210 1,489,205 1, Long-term receivable 529,788 529,629 Current income tax expenses 834,336 1,352,268
2, Fixed assets 3,775,815 6,326,457 Income tax expenses is deferred -77,911 35,017
TOTAL ASSETS 27,842,109 30,370,792 Net profit after tax 3,391,785 101,920
A, LIABILITIES 16,236,374 19,675,820 CASHFLOW STATEMENT
I, Short-term liabilities 16,101,652 19,532,536 Unit: USD 2018 2019
1, Short-term loans and debts 4,494,189 10,971,588 I, Cash flows from operating activities Cash flows from operating activities 1,574,719 -314,781 2, Taxes payable to State Treasury 531,366 243,758 II, Cash flows from investment activities II, Long-term liabilities 134,722 143,284 Cash flows from investment activities -2,259,090 -4,039,167 1, Long-term loans and debts III, Cash flows from financial activities 2, Science and technology development fund 134,722 143,284 Cash flows from financial activities 991,132 5,499,720 B, EQUITY 11,605,736 10,694,972 Effects from exchange rate difference TOTAL LIABILITIES AND OWNER'S EQUITY 27,842,109 30,370,792 Net cash flows during the fiscal year 306,761 1,145,772
*Exchange rate: USD/VND = 23,230
VIETNAM AUTOMOBILES MARKET REPORT 93 Financial statement
HANOI PLASTICS JOINT STOCK COMAPY INCOME STATEMENT Unit: USD 2018 2019 BALANCE SHEET Net sales 46,739,376 51,837,654 Unit: USD 2018 2019 Cost of goods sold 41,514,229 46,772,165 A, CURRENT ASSETS 17,497,413 18,823,491 Gross margin 5,225,147 5,065,489
I, Cash and cash equivalents 855,484 600,161 Income from financial activities 466,568 1,212,776 Expenses from financial activities 40,325 1,301,756 II, Short-term investment 860,956 2,001,722 Interest expenses 30,959 591,350 III, Short-term receivables 12,466,348 12,381,803 Selling expenses 1,810,593 1,492,420 1, Accounts receivable from customers 6,324,178 7,736,070 Administration expenses 1,259,282 1,471,661 IV, Inventories 3,059,658 3,481,020 Profit from operation 2,581,515 2,012,427 B, LONG-TERM ASSETS 5,274,157 23,042,191 Profit before tax 2,986,765 2,022,669 1, Long-term receivable - 5,469,806 Current income tax expenses 553,978 496,212
2, Fixed assets 3,288,407 6,450,045 Income tax expenses is deferred - -
TOTAL ASSETS 22,771,570 41,865,683 Net profit after tax 2,432,787 1,526,457
A, LIABILITIES 8,262,806 21,787,216 CASHFLOW STATEMENT
I, Short-term liabilities 8,262,806 16,885,442 Unit: USD 2018 2019
1, Short-term loans and debts 2,000,785 10,543,892 I, Cash flows from operating activities Cash flows from operating activities 2,503,726 -1,471,220 2, Taxes payable to State Treasury 203,197 195,440 II, Cash flows from investment activities II, Long-term liabilities - 4,901,774 Cash flows from investment activities -6,742,985 -16,406,894 1, Long-term loans and debts - 4,901,774 III, Cash flows from financial activities 2, Science and technology development fund Cash flows from financial activities 14,110 17,622,824 B, EQUITY 14,508,765 20,078,466 Effects from exchange rate difference TOTAL LIABILITIES AND OWNER'S EQUITY 22,771,570 41,865,683 Net cash flows during the fiscal year -4,225,149 -255,290
*Exchange rate: USD/VND = 23,230
VIETNAM AUTOMOBILES MARKET REPORT 94 Financial statement
INOAC VIETNAM CO., LTD INCOME STATEMENT Unit: USD 2018 2019 BALANCE SHEET Net sales 46,046,995 50,719,875 Unit: USD 2018 2019 Cost of goods sold 37,634,019 38,734,944 A, CURRENT ASSETS 19,592,712 22,352,550 Gross margin 8,412,975 11,984,931
I, Cash and cash equivalents 2,758,865 3,464,847 Income from financial activities 137,807 502,422 Expenses from financial activities 633,363 672,603 II, Short-term investment - - Interest expenses 335,610 343,565 III, Short-term receivables 11,043,691 12,318,105 Selling expenses 3,206,288 3,399,296 1, Accounts receivable from customers 10,771,166 11,984,291 Administration expenses 2,990,116 2,904,016 IV, Inventories 5,463,492 6,175,172 Profit from operation 1,721,016 5,511,438 B, LONG-TERM ASSETS 26,148,916 26,223,976 Profit before tax 1,752,784 5,662,563 1, Long-term receivable 533,780 534,512 Current income tax expenses 225,291 1,172,850
2, Fixed assets 20,469,569 20,797,923 Income tax expenses is deferred - -
TOTAL ASSETS 45,741,627 48,576,525 Net profit after tax 1,527,493 4,489,713
A, LIABILITIES 24,004,221 22,388,148 CASHFLOW STATEMENT
I, Short-term liabilities 16,933,075 17,377,544 Unit: USD 2018 2019
1, Short-term loans and debts 4,885,861 3,786,277 I, Cash flows from operating activities Cash flows from operating activities 3,396,239 6,142,388 2, Taxes payable to State Treasury 130,784 468,618 II, Cash flows from investment activities II, Long-term liabilities 7,071,146 5,010,604 Cash flows from investment activities -3,239,141 -2,274,582 1, Long-term loans and debts 7,044,972 4,985,091 III, Cash flows from financial activities 2, Science and technology development fund 26,174 25,513 Cash flows from financial activities -2,352,453 -3,151,501 B, EQUITY 21,737,406 26,188,378 Effects from exchange rate difference TOTAL LIABILITIES AND OWNER'S EQUITY 45,741,627 48,576,525 Net cash flows during the fiscal year -2,195,355 716,306
*Exchange rate: USD/VND = 23,230
VIETNAM AUTOMOBILES MARKET REPORT 95 Financial statement
SUMMIT AUTO SEATS INDUSTRY CO., LTD INCOME STATEMENT Unit: USD 2018 2019 BALANCE SHEET Net sales 2,961,680 2,391,905 Unit: USD 2018 2019 Cost of goods sold 1,713,422 1,296,127 A, CURRENT ASSETS 3,983,961 4,028,620 Gross margin 163,645 189,079
I, Cash and cash equivalents 168,714 210,937 Income from financial activities 224,024 226,290 Expenses from financial activities 39,741 64,622 II, Short-term investment 3,240,529 3,231,644 Interest expenses - - III, Short-term receivables 307,990 242,965 Selling expenses 20,476 14,013 1, Accounts receivable from customers 154,819 150,931 Administration expenses 129,798 147,504 IV, Inventories 251,739 312,545 Profit from operation 197,654 189,230 B, LONG-TERM ASSETS 368,926 609,575 Profit before tax 198,334 190,137 1, Long-term receivable - - Current income tax expenses 20,660 23,013
2, Fixed assets 149,008 360,172 Income tax expenses is deferred - -
TOTAL ASSETS 4,352,888 4,638,195 Net profit after tax 177,674 167,124
A, LIABILITIES 267,953 1,015,073 CASHFLOW STATEMENT
I, Short-term liabilities 266,434 1,013,019 Unit: USD 2018 2019
1, Short-term loans and debts - - I, Cash flows from operating activities Cash flows from operating activities 70,434 543,234 2, Taxes payable to State Treasury 12,437 5,578 II, Cash flows from investment activities II, Long-term liabilities 1,518 2,054 Cash flows from investment activities -8,812 127,937 1, Long-term loans and debts - - III, Cash flows from financial activities 2, Science and technology development fund 1,518 2,054 Cash flows from financial activities - -628,937 B, EQUITY 4,084,935 3,623,122 Effects from exchange rate difference 61,622 42,234 TOTAL LIABILITIES AND OWNER'S EQUITY 4,352,888 4,638,195 Net cash flows during the fiscal year 61,622 42,234
*Exchange rate: USD/VND = 23,230
VIETNAM AUTOMOBILES MARKET REPORT 96 Report Disclaimer
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