Toyota turns corner to production

You have become president of Toyota Motor Vietnam amid Vietnam’s automotive market downturn. What is your plan to drive Toyota Motor Vietnam out of this challenging time?

Yes, it is a challenging time for me to take over this position. In line with the economic slowdown, the increase in ownership taxes imposed on cars in Hanoi and Ho Chi Minh City and other provinces have already blown out the cost of owning a car in Vietnam. Furthermore, news the government may apply many fees like road-use and fees for entering city centres is a worry.

This information badly affected car-buyers and darkened the already gloomy market. To overcome this challenge, in line with focusing on quality of cars and services, we are keeping a close eye on the market to reduce risks in 2012.

But, that is just our short-term plan. We are making a long-term business plan till 2018, when all import tax imposed on completely assembled cars imported to Vietnam will be zero in accordance with the implementation of AFTA. We will maintain production in Vietnam and seek more local suppliers to reduce production costs and improve competitiveness against imported cars.

The previous president of Toyota Motor Vietnam said Vietnam’s automotive industry would face difficulties in  developing in the future because of the instability in government policies. So, what is your priority and will you keep investing in production or just assembling?

I want to affirm that the first priority of Toyota Motor Vietnam is focusing on production in Vietnam. So we will just import a small volume of cars serving special segments in this market. Based on our market research, Toyota Motor Vietnam will continue introducing some imported car models to give customers more choices.

Toyota has just decided to expand investment in Indonesia and it already has factories in Thailand. Does it have any investment expansion plans for Vietnam in the next three years, especially when more Japan medium-sized enterprises are investing in this country?

Toyota Motor Vietnam always tries to expand markets and continuously increases localisation rates because we see Vietnam as a potential market. However, the unstable and inconsistent automotive industry policies forced car-makers to reconsider long-term production plans in Vietnam. I want to repeat that Vietnam has potential to develop an automotive industry.

At present, each 1,000 people have 18 cars on average. It is estimated that the economy will strongly grow from 2020 and the average income per capital will also increase, leading to high demand for cars. Thus, we will carefully study investment plans in Vietnam.

What is the localisation rate for Toyota cars manufactured in Vietnam? How will you increase the rate?

The supporting industries in Vietnam are insufficient. For foreign automotive component suppliers, Vietnam is not an attractive place for investment because of the small scale of the market and low output production. In addition, we also face difficulties in seeking local suppliers to meet all our criteria. That explains why there is only one local supplier out of 17 supplying for Toyota Motor Vietnam.

The change in government policy is another difficulty for localisation. We expect a stable and consistent policy for automotive industry that could encourages investment in Vietnam and attracts more foreign suppliers to this country.