In 2019, the total export turnover of Vietnam’s auto parts and components industry reached a record of USD 5,645 billion, which was USD 1 billion higher than import turnover.

Processing is Vietnam’s competitive advantage

Data from the Information Technology & Customs Trade Statistics Department (General Department of Vietnam Customs) indicated that of the USD 5,645 billion of total exports of auto parts and accessories, electric wire products accounted for USD 2,753 billion, the set of motor vehicle components accounted for USD 1.33 billion, tires accounted for USD 978 million, seats accounted for USD 175 million USD, etc.

High export turnover made Vietnam’s auto parts rank 8th in the top 10 products with the highest export value in 2019. The largest import markets of auto parts from Vietnam are countries with the world’s leading automobile industry such as Japan, USA, EU, Korea, China, etc.

Specifically, Japan is always the leading importer of auto parts from Vietnam. Products imported include electrical wires (USD 1.77 billion), car body components (USD 404 million), seats (USD 109 million). Ranked second is the United States, which imported from Vietnam spare parts such as tires (USD 555 million), wires (USD 512 million), body components (USD 248 million), etc.

According to Ms. Nguyen Thi Xuan Thuy, Deputy Director of the Center for Industrial Support (Department of Industry, Ministry of Industry and Trade), value of Vietnam’s automobile components and spare parts is USD 1 billion higher than that of import, in which items such as wires, tires, plastic parts have had impressive export growth over the years.

Ms. Thuy further said that the processing of products in Vietnam is usually manually made which are bending, bundling, clamping or polishing, scraping the edge of plastic molded products, proving that Vietnamese people are very skillful and Vietnamese enterprises are also creative in production management, making this a competitive advantage of Vietnam compared to other countries in the region.

Mr. Huynh Tan Quyen, Deputy General Director of Cadi-Sun Electric Cable Company shared: “As far as I know, most of automobile electric cables exported from Vietnam are manufactured by FDI enterprises, but there are also parts of the product made by domestic enterprises which also enjoy part of the OEM value (the value of the original equipment manufacturer).

Export of wires leading

With export value in 2019 worth USD 2,753 billion, automotive wire has become the leading export item in the group of automotive components. The major importers of this item were Japan (USD 1.77 billion), the US (USD 512 million), and Canada (USD 201 million).

Surprisingly, markets that are supposed to compete directly with Vietnam for automotive wiring components also import products from Vietnam such as Thailand (USD 43 million), China (USD 26 million), South Korea (USD 79 million), etc. proving that electric wires from Vietnam are an important “link” in the global supply chain of automobile assembly materials.

The representative of Ngoc Khanh Electric Wire and Cable Company Limited (Van Lam district, Hung Yen province) said that all enterprises producing electric wires used in cars currently employ about 25,000 workers. The export rate of these enterprises is up to 90%. Wires in automobiles manufactured by Ngoc Khanh Company are the first link in the wire harness for cars, accounting for 70% of the value of a complete set of automotive wires.

However, products of 100% domestic company such as Ngoc Khanh Company are exported to processing zones right in Vietnam. “At present, our company’s products are being supplied stably to Yazaki Group’s harness assembly factories and the final products are exported to automobile assembly plants of companies such as: Toyota, Mazda, Honda, Subaru, Suzuki. In 2019, the company’s export output was 900 million meters of automobile wires of all kinds, the export turnover reached USD 65 million” said the representative of Ngoc Khanh Company.

In processing zones such as Nomura in Hai Phong, world-class FDI companies such as Yazaki Corporation (the world’s largest manufacturer of automobile wiring set in Japan) create finished products before exporting to foreign countries. In Vietnam, Yazaki has 1 automobile electric cable factory in Nomura Export Processing Zone in Hai Phong and 2 other factories in Quang Ninh, Dong Nai.

In addition to Yazaki, there are also other major exporters of automobile wiring sets in Vietnam: Sumi-Hanel Wiring Co., Ltd. (Sai Dong B Industrial Park, Hanoi) and SumiDenso Company (Dai An, Hai Duong, invested by Sumitomo Wiring System, which is the leading electric cable corporation in Japan with factories in 27 countries around the world.

According to Ms. Nguyen Thi Xuan Thuy, basically, the value-added part of Vietnam in products such as automobile wires is labor, but the effort to maintain continuous exports will increasingly firmly enhance the position of Vietnam’s automotive auxiliary industry in the global supply chain.

Bonny Le – VietnamCredit