History of Car Production in Vietnam

Learn about the history of cars in Vietnam. From the first vehicles to modern production in the country.

In 1958 many Asian countries started the ball rolling on their automotive industry and started producing cars for the masses. While many took inspiration from western designs, they both wouldn’t, and weren’t allowed to copy these cars directly.

In December of that year, the countries leader Ho Chi Minh inspected Vietnam’s first ever car, the Chien Thang (which means Victory). The vehicle itself took inspirations from the French Renault Fregate, and was built at the Polytechnical School in Hanoi.  

Old Car in Vietnam

In 1995 the first proper automotive factories were built in the country. The first brands who started producing vehicles in the country were Mitsubishi, Toyota, and Isuzu. Most of these manufacturers have become part of the Vietnam Automobile Manufacturers Association.

Moving forward to the 21st century; Vietnam’s roadways are now dominated by trucks and bikes.

The rise in popularity of bike transport came about due to the busy streets even if they offer little protection from the unpredicatable weather in Vietnam.

Car Production in Vietnam

Nowadays, while the automotive industry is still relatively small in Vietnam, it is still the fastest growing in Southeast Asia according to the International Organization of Motor Vehicle Manufacturers.

In Vietnam, production usually works like this… Cars are designed abroad and then produced in another country. Then the parts are shipped into Vietnam and assembled. As of 2018 85% of all car sales come from these ‘car kits.’ These cars are then mainly sold domestically due to complicated import/export regulations.

However, Vietnam does exceed in producing its own spare car parts – exporting over $4.4 billion worth of auto parts around the world in 2017.

Shipping also plays a large part in the vehicle industry as Vietnam develops as a regional manufacturing hub. As the road haulage sector grows, there are more trucks on the road. Currently, trucks support 75.6% of all freight transport in Vietnam. Which is significant is considering 40% of the road network is in poor condition, and only 19% is paved.

Modern Vehicles

In 2017 272,750 vehicles were sold in Vietnam, which was down 10% compared to the previous year. 77,790 of these cars were imported from other countries, an annual increase of 9%. While the remaining 194,960 were all assembled domestically.

Modern Vietnamese Car

In 2018, 103,746 vehicles were sold in the first 5 months. Which is down 6% from the previous year according to the Vietnam Automobile Association. As opposed to the year before, domestically assembled vehicles grew by 10% and imported cars decreased by a massive 46% to just 16,320 units during this period.

The substantial decrease in imported vehicles in early 2018 was due to the fact manufacturers didn’t meet certain conditions and procedures relating to production. This stall meant that no cars were imported in the first 2 months of 2018.

Looking to the future – car sales are predicted to grow by 22.6% by 2025. These predictions are based mainly on the emerging middle class in Vietnam, as well as rising disposable income levels and the countries overall rising GDP.

Production in the domestic automotive industry is expected to grow by 18.5% by 2025, outputting over 531,000 units. From there plans are to increase output to 1.76 million units in the country by 2035.