Is Vietnam Overproducing Cars?

Photo by Việt Linh.

Recently, Li Shufu, Chairman and founder of the Geely Group, stated at an automotive forum held in Chongqing, China, that the global automotive industry is facing a “severe surplus situation.” So, how does the Vietnamese automotive industry fare in terms of production, and is there indeed a “severe surplus” as described by the Chairman of Geely?

Domestic Automobile Production on the Rise

According to a report by the General Statistics Office, the output of domestically assembled automobiles in Vietnam in May is estimated at 37,700 units, a 54.6% increase compared to the same period last year.

From the beginning of the year, the total domestic automobile output in Vietnam is estimated at 183,400 units. According to the General Statistics Office, the output of domestically assembled automobiles in the early months of this year has increased by over 70% compared to the same period in 2024.

Thaco factory, responsible for assembling Mazda and Kia vehicles in Vietnam. Photo by Việt Linh.

According to a report by the Vietnam Automobile Manufacturers Association (VAMA), the sales of domestically assembled vehicles in Vietnam up to May stood at 62,764 units. Hyundai’s assembled car sales (preliminary figure up to April) reached 14,837 units, while VinFast announced that electric car sales in Vietnam after 5 months reached 56,187 units.

Thus, the sales of domestically assembled vehicles in Vietnam up to May will not be lower than 133,788 units. This figure shows a significant difference compared to the total output of 183,400 domestic vehicles estimated by the General Statistics Office for the same period. However, it is important to note that not all domestically produced vehicles are sold to Vietnamese customers.

VinFast is exporting its products to Southeast Asian countries. Hyundai Thanh Cong has also just exported a batch of Palisade SUVs to Thailand, aiming to export more than 4,000 Hyundai-branded vehicles to Southeast Asian countries in the 2024-2025 period.

VinFast exports electric cars to many countries, including the US. Photo by Bội Hạ.

In the group of imported cars, the gap between supply and consumption in the Vietnamese market is more balanced.

According to a report by the General Department of Vietnam Customs, as of May, Vietnam had imported a total of 84,045 completely built-up cars, with a value of nearly 1.83 billion USD. Compared to the same period last year, this group increased by 43.3% in volume and 47.7% in value.

According to VAMA, sales of imported cars in Vietnam up to May reached 68,280 units. Toyota Yaris Cross (4,270 units since the beginning of the year) and Ford Everest (4,012 units) are the best-selling fully imported models chosen by Vietnamese customers.

The Future of Vietnam’s Automotive Industry

In the Southeast Asian automotive industry map, Vietnam does not hold a very high position.

Data collected by the ASEAN Automotive Federation (AAF) showed that in the 11-month period last year, Thailand remained the region’s largest automotive production hub with an output of over 1.363 million vehicles. Notably, this output was equivalent to a 20.2% decrease compared to the same period in 2023.

Indonesia ranked second in the region in automotive production, with nearly 1.3 million vehicles. Malaysia demonstrated its potential by recording a domestic automotive output of 725,173 units in the first 11 months of 2024, ranking third in the region.

The AAF report showed that Vietnam temporarily ranked fourth in Southeast Asia, with a domestic automotive output of 157,115 units in the first 11 months of 2024.

Mercedes-Benz factory in Ho Chi Minh City. Photo by Quỳnh Danh.

In Vietnam, in addition to a series of car brands that are producing vehicles from domestic assembly lines, such as VinFast, Toyota, Hyundai, Ford, Mitsubishi, Mazda, Kia, Peugeot, MINI, BMW, and Mercedes, new car brands, including Omoda, Jaecoo (under the Chery group), Lynk & Co, Geely (Geely Group), Tank, and Haval (Great Wall Motors Group), have also made moves to prepare for their plans to build domestic car manufacturing and assembly plants.

Among them, Chery has identified Vietnam as the main automotive production hub in Southeast Asia. According to exclusive sources, Li Shufu’s latest statement about halting the development of Geely factories does not affect Vietnam, and the construction of the Geely factory in Vietnam is expected to commence in 2025.

With a large population and a market that still has a lot of room for growth, coupled with a not-too-large vehicle output, it can be seen that Vietnam has not basically fallen into a surplus crisis in automobile production. However, the fact that neighboring countries such as China and Thailand are facing a surplus also puts significant pressure on Vietnam’s automobile manufacturing and assembly industry, which could lead to a continued price war and intense competition.

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