Toyota, the world’s largest car maker, is considering whether to end its manufacture in Vietnam when import taxes become zero under a regional agreement in 2018.
Yoshihisa Maruta, president of Toyota Motor Vietnam, said at a press conference last week that the company would have to make the decision this year because it usually takes three years for developing a new model, and taxes would fall to zero by then under the ASEAN Free Trade Agreement (AFTA).
He was quoted by news website Dat Viet as saying it is cheaper to import a car than to import the parts and assemble them like Toyota now does in Vietnam.
Another large carmaker, South Korea’s Hyundai, recently announced it would focus its production efforts on Malaysia rather than Vietnam as many had expected it to do.
A Toyota's Camry. Photo: www.toyota.edu.vn
Maruta said the biggest difficulty for Vietnam is that it has failed to develop supporting industries, thus reducing its competitiveness.
The percentage of parts made here for automobiles is only 10-30, most of it basic, low-value ones.
Toyota has produced 305,780 cars in Vietnam but yet there are only 18 local components manufacturers who supply 270 parts.
It is clear that Toyota cars made in Vietnam will not be able to compete with those imported from Thailand or Indonesia when the import tax goes.
According to Maruta, Toyota Motor Vietnam will have to decide whether to assembly or to import whole cars.
“To answer the question ‘Will Toyota continue to make cars in Vietnam?’” we will have to wait for detailed automobile industry development strategies from the Vietnamese government,” he said.
Last year Toyota sold 41,205 cars, up 24 percent from the previous year and accounting for a 31 percent market share.