Toyota to Reconsider Vietnam Plant
Being one of the world’s largest automakers, Toyota has manufacturing plants in countries across the globe. But soon, import taxes will become zero in Vietnam, once the ASEAN Free Trade Agreement (AFTA) goes into effect in 2018. This is making Toyota reconsider its current plant in the Asian country, which is located just outside the county’s capital of Hanoi.
Currently, Toyota produces the Corolla, Camry, Land Cruiser, Vios, Zace, Hiace, Innova, and Fortuna at its Vietnam plant, which has produced a total of 305,780 vehicles total. Only 10 – 30% of parts used to produce these automobiles are made in Vietnam, meaning Toyota currently has to import the majority of its parts to the country. Once the AFTA goes into effect, it will be a lot easier for Toyota to remain competitive in its Vietnamese market if it imports vehicles from Thailand or Indonesia.
Toyota’s Vietnam sales in 2014 totaled 41,205 vehicles, which was an increase of 24% from 2013, and gives the automaker a 31% share of the market in that country. It’s clear that by keeping production in Vietnam, Toyota could risk losing its market share due to rising costs.
Toyota isn’t the only carmaker to consider pulling production from Vietnam. Hyundai already announced that it would move production to Malaysia rather than Vietnam once the zero import tax takes effect.
Yoshihisa Maruta, Toyota Motor Vietnam’s president, commented, “To answer the question ‘Will Toyota continue to make cars in Vietnam?’ we will have to wait for detailed automobile industry development strategies from the Vietnamese government.”
News Source: Thanhnien News