HANOI — Transport Industry Corp. (Transinco) is aiming to strike back at the competitive threat from foreign automakers in the country by unveiling plans for five locally invested projects that will produce substitutes for imported vehicles, published reports here say.
The company's general director, Nguyean Vaen Khoa, says in a news agency report that the five projects, with total capitalization of US$100 million, are aimed at breaking the stranglehold of foreign firms on the automobile, motorbike and construction machinery markets.
The new projects call for Vietnamese manufacturers to produce cheap, good quality vehicles made entirely in Vietnam rather than assembled with imported parts. Khoa says the projects, financed mainly by domestic investors and bank loans, are part of the government Transport Ministry's 10-year development plan.
The largest of the projects will build a US$64 million semi-knock-down bus manufacturing plant in Noang Anh district, located on the outskirts of Hanoi. The plant will have an annual capacity of 2,000 units.
The bus plant will source 30% of its production materials in the domestic market during its first year of operation, rising to 50% over five years. Body frames and engines will be imported from South Korea'sMotor Co. Ltd.'s commercial vehicle division and a Chinese company, while the sheeting and internal fittings will be supplied by local company affiliates.
The high proportion of locally sourced components will enable the company to set its prices one-third lower than domestic joint ventures and undercut importers by 50%, Transinco officials say.
Khoa hopes the new project will prompt the country's automotive JVs to cut back their heavy dependence on imported materials. Since the 11 Vietnamese automobile joint ventures opened their doors in the early 1990s, they have sourced up to 90% of their production materials offshore, he says.
The JVs argue that the state pricing agency has no jurisdiction over vehicle prices in the domestic market. Plus, they say, the small market keeps prices high as the cost of manufacturing accessories here is almost double that of importing them.
Studies show that prices of Vietnam's tourist coaches are twice that of neighboring countries such as Thailand, Malaysia, Indonesia and China.