Sunday, August 20, 2017 - 3:18:41

Top carmaker delays on greener Euro 4 standards

Print

Truong Hai Auto Corporation, the largest domestic automobile company in Vietnam, has obtained the Government’s permission to extend the timeline for its manufacturing of Euro 2- and Euro 3-standard engines. Vietnam Investment Review reports.

In an announcement sent to the company late last month, Deputy Prime Minister Hoang Trung Hai stated the Prime Minister had agreed “in-principle” to allow Chu Lai-Truong Hai engine plant “to manufacture and sell 100,000 diesel auto engines until the end of 2018”.

The permission followed a plea by the corporation and Quang Nam province People’s Committee to allow the automobile maker to continue manufacturing and selling the more polluting Euro 2 and Euro 3-standard engine models after January 1.

According to a Government decision issued back in 2011, all cars and motorbikes manufactured or imported in Vietnam would have to meet Euro 4 emission standards from January 1, 2017 instead of the current Euro 2 and 3 standards.

During the two-year extension, Truong Hai must prepare investment plans and upgrade production lines to manufacture higher standard engines.

Chu Lai-Truong Hai was the first auto engine factory in Vietnam, intended to increase the localisation rate for the automobile industry. The project, situated in Chu Lai Economic Zone, Quang Nam province, is worth 182 million USD.

According to Truong Hai, it has signed a technology transfer contract with the Republic of Korea’s Hyundai Motor Company to produce about 20,000 Euro 2 and Euro 3 emission standard engines annually.

Under the Government’s roadmap, Chu Lai-Truong Hai would have to stop manufacturing Euro 2- and Euro 3-standard engines in January 2017. The company had called for a revised timescale as the implementation of higher production standards would make it difficult to produce sufficient numbers of the current engine types within just three years.

Quang Nam People’s Committee pointed out that the technology upgrade for manufacturing Euro 4 engines in such a short time would be very costly, backing the manufacturer’s request to extend the timeline for manufacturing Euro 2 and Euro 3 engines.

Truong Hai previously obtained preferential incentives from the Government for the project when recognised as a key national engineering project.

This status allowed the company to take loans up to 85 percent of project’s total value from the Vietnam Development Bank with a preferential interest rate over 12 years. Truong Hai would also receive a government guarantee when borrowing capital from foreign credit providers. The company enjoys hugely discounted import and export taxes.

Vietnam’s automobile industry is beset by relatively scattered designs and low rates of domestication which remain at 7–10 percent for cars and 35-40 percent for trucks.

It has yet to meet the domestic consumer demand that has continued to increase over the past two decades. Its focus on assembly has prevented it from developing a complete manufacturing plant.-VNA
Your comments about this article ...
Others