Opportunities for domestic tyre manufacturers
According to analysts, the recent development of the automobile industry will open various opportunities for domestic tyre manufacturers.
The development of the automobile industry
The Vietnamese automobile industry has contributed billions of dollars per year to the state budget and created jobs for thousands of workers, according to Mr. Do Huu Hao - Chairman of Vietnam Automobile Engineers Association.
According to the automobile industry development plan to 2020, vision to 2030, the automobile industry is oriented to become an important industry of our country. Accordingly, the Vietnamese automobile industry set targets by 2020 to meet 30-40% of the demand value for components and spare parts for domestic car production. By the period of 2026 - 2030, the automobile industry will meet more than 50% of the value of components and spare parts for production of domestic cars.
Opportunities and challenges for tyre manufacturing industry
The development of domestic automobile products promises to open up many opportunities for tyre products, one of the most important components that enterprises produced and successfully met the car manufacturing industry.
From 2010 to 2018, the tyre manufacturing industry in Vietnam achieved a continuous increase in export value with a growing gap. In 2018, export surplus is expected to be over 650 million USD and now Vietnam has exported tyres to 128 markets. Currently, there have been about 211 enterprises participating in exporting tyres, of which 2 leading enterprises accounting for 56.3% of export turnover are foreign invested enterprises, namely Sailun (China), Kumho (Korea).
According to the analysis of experts, the strong development of the automotive industry recently will open up opportunities for domestic tyre manufacturing enterprises as suppliers of equipment and accessories. "The development of the luxury car segment along with F1 racing, to be held in Vietnam from 2020, will motivate high-end tyre brands to join the competition for market share." .
Vinfast (the member of Vingroup), the current emerging auto manufacturer, also expressed its ambition to successfully build an auxiliary industrial production complex. Vingroup's goal is to create a synchronous supply chain to develop the automobile industry to become a leading industry for domestic industry development.
Mr. Vo Quang Hue, Deputy General Director of Vingroup, in charge of Vinfast, said: “We are ready to create the best conditions for investors, ready to sign many joint ventures and cooperate with leading manufacturers in the world as well as in the country to establish joint ventures, especially our priority is given to producers who have been present in Vietnam and Vietnamese supporting industries”.
The Ministry of Industry and Trade forecasts that the growth rate of the value of Vietnam's tyre market will reach about 8% per year in the period of 2018-2020, 2 times higher than the average level of the world and higher than the average of 6% of the growing market group. Production structure, product segment and target market now have a clear differentiation among enterprises. The FDI group mostly focuses on Radial tyres for cars to serve the export target, while the domestic business group has a diversified product portfolio and most of the revenue is contributed by the domestic market.
To increase the opportunity to compete with foreign tyres, Vietnamese tyre manufacturers are encouraged to increase investment in technology to improve product quality; to have competitive price and good after-sales service.
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