Nissan car plant shifts into gear

The $110-million project, whose three partners are Nissan, Tan Chong of Malaysia and Danang Auto Engineering Factory, was licensed by the Ministry of Planning and Investment in 1996. Plans were continually delayed due to the 1997 regional financial crisis and low domestic demand until the government finally cancelled the licence.
Tan Chong deputy general-director Ang Bon Beng said a recent survey of the domestic auto industry conducted by his company and Nissan had convinced investors it was time to return to Vietnam.
"Nissan is now financially stronger given the involvement of Renault with a 44 per cent stake," he added. "It’s time for the automaker to make a comeback."
A source from the Danang People’s Committee said that the project could be based in Lien Chieu Industrial Park, as the plant’s original location had been awarded to another project.
While foreign-invested automobile firms in Vietnam have seen sluggish sales in the first seven months of the year, they applauded news of the Nissan initiative.
Makoto Sasagawa, president of Toyota Vietnam, said that he welcomed any newcomers to the market, because they would force the industry to develop more quicky in the face of tougher competition.
"The most important thing is to make competition fair and ensure the same business rules are applied to every automobile firm in the market," said Sasagawa, who is also chairman of the Vietnam Automobile Manufacturers’ Association (VAMA).
Sasagawa’s comments come amid an-ever shrinking luxury sedan market, where all 11 foreign-invested firms in the country are reported to be running below capacity.
January’s increases in special consumption and VAT taxes have pushed the price of luxury cars higher, putting off potential customers.
VAMA figures show that after the first seven months of the year, the 11 firms collectively sold just over 15,800 units. Total sales in 2001, 2002 and 2003 reached 20,000, 27,000 and 43,000, respectively.
But a senior official from the Ministry of Industry (MoI) who preferred to remain unnamed told Vietnam Investment Review said that despite this modest volume, several foreign-invested automobile firms still saw great potential in the five-seat sedan market.
He confirmed that a number of foreign investors were seeking to establish automobile assembly plants in Vietnam.
"Under the master plan soon to be approved soon by the government, all enterprises will have the chance to be granted investment licenses if they satisfy criteria of assembling plants, technologies and capacity put forward by the MoI," he said.
But Nguyen Xuan Chuan, former vice minister of Industry, said that new entries to the market could face difficulties due to the government’s current condition that 80 per cent of their assembled cars had to be exported.
The condition, released in 1997, was designed to set up barriers against potential foreign automotive investors. No new foreign automotive investors have satisfied the condition.
He said that a foreign automotive interest from China that hoped to build a car assembling plant in Lao Cai province had finally abandoned its plans because it failed to satisfy the condition.
It is estimated that there are currently 30 automobile assembling and production enterprises registered at the Ministry of Industry but the majority are producing and assembling specialised automobiles.