Vietnam’s Automotive Market: A Gateway for Indian Suppliers
Vietnam is rapidly emerging as a critical player in the global automotive market. Its strategic location, robust economic growth, and welcoming business environment have positioned it as a hub for foreign direct investment (FDI), particularly in sectors like manufacturing and services. With the vehicle market projected to grow at a staggering CAGR of 25% in the coming years, opportunities abound for Indian automotive component manufacturers eager to tap into this burgeoning market.
Vietnam’s Global Significance
Vietnam’s economic landscape has garnered global attention due to its increasing integration into global value chains. It has become a favored destination for multinational companies seeking production efficiency and access to the expanding Southeast Asian markets. This trend has particularly benefited the electronics, textiles, and automotive sectors. As consumer spending rises, the vehicle market is experiencing unprecedented growth, presenting ample opportunities for Indian suppliers to engage with both Original Equipment Manufacturers (OEMs) and the aftermarket.
The India Pavilion at Automechanika Ho Chi Minh City
At the recently held Automechanika Ho Chi Minh City expo, the India pavilion showcased Indian suppliers’ potential as they navigated the local market. The event, which took place from June 23 to 25, 2023, featured 14 exhibitors, each keen to explore new business opportunities while displaying the latest in automotive products and services tailored for internal combustion engine (ICE) vehicles and electric vehicles (EVs).
The pavilion included notable exhibitors such as Paracoat Products, JCBL India, GoMechanic, and GreenFuel Energy Solutions. By participating in this aftermarket-focused show, Indian companies aimed to strengthen their foothold in the Vietnamese market, which is known for its fast-paced auto industry development.
EV Demand: The Rise of E-Two-Wheelers and Three-Wheelers
As Vietnam focuses on transitioning to electric mobility, the demand for electric two- and three-wheelers is set to explode. With its favorable geographical advantages and a pronounced shift toward sustainable transportation solutions, Vietnam is an ideal market for Indian manufacturers who have made substantial advancements in producing components for e-two-wheelers and three-wheelers.
India’s existing capabilities in developing and producing these components position it well to meet Vietnam’s escalating demand for sustainable transport options. This mutual interest opens avenues for collaboration and growth, making Vietnam a logical target for Indian auto suppliers looking to expand their international presence.
Findings from the ACMA Delegation’s Visit
Last August, a delegation from the Automotive Component Manufacturers Association (ACMA) visited Vietnam to explore investment opportunities and bolster economic ties. Collaborating with the Indian Embassy and local advisory bodies, they organized the ‘India Vietnam Business Meet on Auto Sector,’ facilitating B2B interactions between Indian and Vietnamese representatives.
The delegation, comprising 28 leading Indian auto parts manufacturers, visited local manufacturers and R&D firms, gaining insights into Vietnam’s automotive landscape. Their efforts culminated in a Memorandum of Understanding (MoU) with the Association of Foreign Investors in Vietnam, demonstrating a commitment to nurture bilateral automotive investments.
India’s Export Landscape: Key Components to Vietnam
While trade between India and Vietnam in the automotive sector remains nascent, it is growing rapidly. In fact, exports from India to Vietnam increased from $250 million (approximately ₹2,061 crore) in FY2020 to $406 million (approximately ₹3,348 crore) in FY2023. This growth highlights the evolving dynamics of collaboration between the two countries.
Key exports include engine components, electrical parts, and transmission components, all critical for both vehicles and their aftermarket needs. Moreover, Vietnam imports accessories to enhance vehicle features and cater to the preferences of its consumers. As Vietnam’s auto industry continues to expand, Indian suppliers must stay engaged to capitalize on this demand.
The Road Ahead
The future of the automotive market in Vietnam looks promising, particularly for Indian manufacturers specializing in EV components. The focus on sustainability and innovative transportation solutions offers a fertile ground for collaboration between the two nations. With events like the Automechanika Ho Chi Minh City fostering such relationships, the pathway for Indian suppliers to enter this vibrant market is laid out and ready for exploration.