Vietnam’s motor vehicle manufacturing sector recorded a 178.7 percent increase in January compared to the 2019 baseline, according to Vietnam’s Industrial Production Index. However, this marked a decline from December 2024, when output was 234.2 percent above 2019 levels.
Month-on-month, production fell by 13.8 percent in January compared to December. Despite this, year-on-year output surged by 72.6 percent from January 2024, indicating strong recovery and expansion in the sector.
Of note, Vietnam’s motor vehicle manufacturing industry has grown rapidly in recent years, driven by increasing domestic demand, rising disposable incomes, and the country’s strategic position in Southeast Asia. The sector encompasses the production of a wide range of vehicles, including motorcycles, cars, buses, and trucks. Vietnam is one of the largest motorcycle markets in the world and has a growing automotive market that is increasingly attracting both local and foreign manufacturers.
The motorcycle manufacturing industry is particularly important in Vietnam, as motorcycles are the primary mode of transportation for the majority of the population. Vietnam has long been home to a vibrant domestic motorcycle industry, with leading manufacturers such as Honda Vietnam, Yamaha Motor Vietnam, and Suzuki Vietnam establishing large production facilities in the country. These companies produce millions of units annually, with a significant portion of production dedicated to both local consumption and export to other Southeast Asian markets. The affordability, fuel efficiency, and versatility of motorcycles make them the preferred choice for daily transportation, especially in urban and rural areas.
The automotive industry, while smaller than the motorcycle sector, has seen significant expansion in recent years, particularly in the production of passenger cars, trucks, and commercial vehicles. Several international automotive manufacturers, including Toyota, Ford, Hyundai, and Mitsubishi, have established assembly plants in Vietnam. These plants primarily assemble vehicles from imported parts, though there has been a push to increase the level of localisation in production, with more components being sourced domestically.
The Vietnamese government has also played a role in fostering the growth of the motor vehicle manufacturing sector by providing incentives for foreign investment, offering tax breaks, and supporting the development of infrastructure. However, the industry still faces challenges such as a high reliance on imported components, a lack of advanced manufacturing technologies, and environmental concerns related to vehicle emissions.
Despite these challenges, Vietnam’s motor vehicle manufacturing industry is expected to continue growing, driven by a young and increasingly affluent population, greater integration into regional and global supply chains, and continued foreign investment. The rise of electric vehicles is also likely to play an important role in the future development of the sector, contributing to the country’s long-term economic growth and sustainability goals.
See also: Automotive Industry in Vietnam