Some 50,000 vehicles per year is the minimum production level needed for the growth of the Vietnamese auto part industry. Unfortunately, few car producers in Vietnam have reached such a level.
Vietnam has worked to raise the number of local part suppliers in the global supply chains, aiming to have about 1,000 enterprises capable of supplying directly to assembly enterprises and multinational corporations by 2025.
As Indonesia has imposed large-scale social distancing measures in the face of the COVID-19, local suppliers of auto parts are ramping up online sales which happen to be effective in the new circumstance.
Vietnamese firms in the mechanical engineering outsourcing sector have low competitiveness when joining global supply chains largely due to their small scale, technological shortages, and low productivity.
The increasing number of Vietnamese suppliers who provide parts and components to Samsung would not only help Samsung Vietnam (SEV) reduce its production costs, but also develop the country’s auxiliary industry.
A shortage of capital support for the part supplying industry is hindering the development of the sector, which is crucial for the country’s economic development.
The localisation rate in Vietnam - the percentage of a product locally made - is too low as the number of Vietnamese part supplying businesses accounted for only three percent of the country’s total.
Industries thriving due to free trade agreements (FTAs) should seek foreign investment to develop domestic suppliers of parts or materials for manufacturing, experts said.
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