Thaco invests in technology innovation to increase localization

As the leading automobile manufacturer in Vietnam, Thaco is one of the enterprises that actively upgrade technology, invest in supporting industry, increase localization rate, boost spare parts business, step by step participating in the global value chain.

For the automotive sector, localization is understood as an activity to increase the domestic production value ratio for automobiles and other parts and components to replace the import value. This is one of the difficult problems in the sustainable development process of the industry that most domestic manufacturing enterprises have encountered.

In the context of the auto import tax rate in the ASEAN area has reached 0% and is causing significant pressure on domestic manufacturers, increasing production capacity, especially raising the localization rate more than 40% to enjoy the 0% tax rate, boosting exports (under the ASEAN Trade in Goods Agreement – ATIGA that Vietnam is a member) is an indispensable path for businesses to survive and develop.

Mr. Pham Van Tai – General Director of Thaco said: “Localization is a difficult problem for automobile enterprises, because localization needs a large financial source and a large output, while the Vietnamese market capacity is still relatively small. However, increasing the localization rate will help enterprises own production, reduce costs, improve competitiveness of products”.

From the reality of the Vietnamese automobile industry and its business practices, Thaco has set the goal of localization and participation in the global value chain. In addition to automobile assembly plants, many years ago, the company invested in building a group of supporting industrial plants in Chu Lai – Truong Hai Mechanical and Automobile Complex with the main task of producing components – spare parts for automobile production, supplying to partners, and also exporting to the world market. These factories play an important role in achieving the goal of increasing the localization rate of Thaco’s products to over 40%, meeting the requirement of enjoying 0% tax rate when exporting to ASEAN countries.

The way to implement this strategy is to support small and medium enterprises to switch to industrial production; inviting investment in the complex; implementing joint venture, association, cooperation with partners with appropriate technology to create products of international standards and participate in global value chains. Currently, there are 5 automobile assembly plants and 15 factories producing automotive spare parts, mechanical components, agricultural machines, etc. with modern equipment lines transferred from European, Japanese and Korean partners operating in the complex.

In addition, Thaco has invested in logistics, establishing road transport, shipping and port companies in Chu Lai, providing packaged logistics services; to operate direct maritime routes from Korean, Japanese and Chinese seaports to Chu Lai, creating favorable conditions for Thaco’s goods import and export activities and enterprises in Chu Lai OEZ and the Central region – Central Highlands.

To prepare for the integration, from 2017, Thaco started a new development investment cycle with the strategic goal of building Chu Lai – Truong Hai Mechanical and Automotive Complex to become a well-known mechanical center – Automotive and supporting industries in the region. In addition to upgrading existing factories, Thaco has continued to invest in new automobile assembly plants, including new truck houses; Southeast Asia’s most modern passenger car manufacturing plant, fully automated production line, etc.

Productivity and Quality Office