Recent growth in Vietnam's manufacturing sector set to continue over the next decade
Vietnam is one of the fastest developing automotive markets in south-east Asia, with a growing manufacturing base of foreign joint ventures and a homegrown EV industry exporting to the world.
Vietnam is growing as a manufacturing location in the Association of Southeast Asian Nations (ASEAN), led by domestic electric vehicle (EV) maker VinFast and with strong performance shown by Asian carmakers including Hyundai, Toyota and Mitsubishi. Local vehicle production and domestic parts production is expected to grow into the next decade.
However, the country is currently reliant on imports of both vehicles and parts. Vietnam’s automotive imports are on track to set a new record in 2025, with customs data showing a sharp rise in volumes and value, as domestic production and global trade flows drive increased supply chain activity.
Up to the second week of July this year, Vietnam imported more than 111,000 finished vehicles, according to the General Department of Vietnam Customs, an increase of +21% compared to the same period in 2024 (91,637) and led by imports from China and Thailand.
Passenger vehicles accounted for more than 84,000 units over the period while imported trucks reached more than 13,600 units. The overall value of vehicle imports between January and July this year was $2.4 billion. In June the number of imported vehicles stood at 18,811, a slight decrease on the previous month (-1.2%).
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Meanwhile, the value on parts and accessories imports to Vietnam stood at $2.89 billion over the same period. China remained the largest supplier, followed by Thailand, South Korea, Japan, India and Indonesia. Vietnam is heavily dependent on parts imports for localised production, with only around 20% of components produced domestically.
According to Vietnam Investment Review, the automotive market in Vietnam will grow by between 14-16% annually by the end of this decade, with total consumption of over 1 million units. Of these, electric and hybrid vehicles are expected to account for 350,000 units.
Growth market in Vietnam
In the domestic market, the Vietnam Automobile Manufacturers’ Association (VAMA) reported that total vehicle sales in June reached almost 32,000 units, +9% in May this year and +20% year on year. Market leaders alongside VinFast, Hyundai, Toyota, Ford and Mitsubishi, include Thaco Kia, Thaco Mazda and Honda. All have manufacturing facilities in the country (including joint ventures), with sales made up of both domestic production and import.
Market leaders alongside VinFast, Hyundai, Toyota, Ford and Mitsubishi, include Thaco Kia, Thaco Mazda and Honda. All have manufacturing facilities in the country (including joint ventures), with sales made up of both domestic production and import.
Toyota was the first to establish a manufacturing plant in the country when it opened its plant in Vinh Phuc back in 1995. On its 30th anniversary in March this year the carmaker passed the milestone of making 700,000 vehicles in the country. In July this year Toyota Vietnam Automobile Company (TMV) also passed the milestone of delivering 1 million vehicles and in the same month announced sales of more than 6,800 vehicles, including Lexus brand vehicles.
Currently, the Vinh Phuc plant makes the Veloz Cross and Vios models, while it imports the Corolla, Innova and Yaris, as well as the four Lexus models: NX, RX, GX and LX. Toyota assembles just over half the amount (56%) it imports in Vietnam. In terms of localised production, the carmaker has 60 suppliers, including 13 Vietnamese companies, lifting the total number of localised products to over 1,000.
Specific to Toyota Motor, the carmaker had delivered a total of nearly 36,000 vehicles to customers in Vietnam between January and July this year, a 25% increase over the same period in 2024.
Hybrid vehicle sales have also increased, with 755 sold in July, nearly double the number of Toyota hybrids sold in Vietnam in July 2024. To date, Lexus has delivered around 15,000 cars to Vietnamese customers since the brand was officially introduced to the market. Toyota is also supporting 20 million vehicles in Vietnam with aftermarket services.
Hyundai is vying with Toyota to be Vietnam’s most popular foreign carmaker. As with a number of other foreign carmakers in Vietnam, Hyundai has a joint venture with a domestic manufacturer, in its case Thanh Cong Manufacturing. Hyundai Thanh Cong Manufacturing Vietnam (HTMV) was set up in 2017 for full vehicle assembly (after six years in which Hyundai was exporting complete knockdown kits for assembly by Thanh Cong Manufacturing).
Ford in partnership
Ford has also marked 30 years in Vietnam as part of a joint venture with Song Cong Diesel Company (Ford 75%: Song Cong 25%) but actually began manufacturing operations at its Hai Duong plant in 1997, which has so far received total capital investment of more than $208 million.
Total annual capacity at the plant, which was expanded in 2020, currently stands at 40,000. The Hai Duong plant assembles the Ranger pickup, Territory CUV and the Transit van. Ford also imports the Raptor pickup and Everest SUV from its plant in Thailand. Ford distributes the vehicles to 56 dealers across Vietnam.
Mitsubishi looks at growth
In 2024 Mitsubishi sold more than 41,000 vehicles, of which approximately 4,100 units of the Xpander MPV were assembled locally from imported complete knockdown (CKD) kits at its Binh Duong factory, just north of Ho Chi Minh City. The factory assembled 1,700 Xpanders in the first half of this year.
The rest of Toyota’s product line up for Vietnam is imported from the Asean region, with the Attrage, Triton and Pajero Sport manufactured at Mitsubishi’s Laem Chabang plant in Thailand, and the Xforce compact SUV produced in Indonesia at the Bekasi Regency facility, near Jakarta.
Service parts are also supplied from Thailand and Indonesia, as well as from Japan. As of the end of FY2024 (March 2025), there were 64 dealers across the country stocking Mitsubishi vehicles and 59 service workshops.
To better manage the distribution of service parts across those dealers and service workshops, Mitsubishi has just opened a new 3,500 sq.m parts distribution centre (PDC) at the Song Than Industrial Park in Ho Chi Minh City.
“The new warehouse has expanded total capacity by 60% and improved productivity by 25% with the optimisation of layout and storage racks,” said a spokesperson for Mitsubishi. “In addition, the increased capacity of the shipping area contributes to more frequent deliveries and shorter delivery lead-time to dealers.”
Transport capacity and cost
Mitsubishi was one of the first foreign carmakers to establish production in Vietnam. Mitsubishi Motors Vietnam (MMV) began operations at Binh Duong in 1994. With the Vietnamese automobile market expected to grow in the coming years Mitsubishi anticipates an increase in local production and imports to meet rising demand.
There has been speculation about a second Mitsubishi plant in Vietnam since 2018 but Mitsubishi would not confirm those plans. However, in October 2024 CEO Takeo Kato said the vehicle market in Vietnam could double by 2030. Given its position in the top five most popular car brands, either local production capacity or imports will have to increase.
With the latter in mind, Mitsubishi said that securing vessel capacity is one of its key challenges and it was addressing the issue in a variety of ways (though none were disclosed). Growth of the vehicle market in Vietnam also raises questions about vehicle logistics inland and the company said that one of the challenges it faces is the high cost of inland transport.
Better and more cost-effective logistics for both finished vehicles, and inbound and service parts, will be essential as Vietnam’s free trade agreement with Asean partners fuels its growth into a hub for vehicle production and distribution in south-east Asia. That is something Mitsubishi said it is closely monitoring.
Localised electric
Domestic electric vehicle maker VinFast has a healthy 26.7% of the passenger car market in Vietnam, equal to 67,066 units in the first half of 2025. It sold 87,000 vehicles last year, 90% of its overall sales globally and almost three times as many vehicles as it sold in 2023.
VinFast now has two plants in the country, with its Ha Tinh plant inaugurated on June 29 this year joining its Hai Phong plant, which has been producing vehicles since 2017. Ha Tinh has started production with the VF 3 and is expected to add production of the Minio Green, EC Van, and several other new models currently under development, according to the company.
The rest of the VinFast lineup is made at the 335-hectare Hai Phong plant located on an industrial park on Cat Hai Island near the city. The plant has a maximum annual capacity of 300,000 EVs, including the VF 8, VF 9, VF 3, VF 5 and VF 6 for the local market, and for global distribution.
The carmaker says that with positive momentum from key international markets such as Indonesia and the Philippines, and most recently India, the share of exports is expected to increase steadily in the near future. VinFast is also currently exporting vehicles to the US, Canada, Europe, the Middle East, and several Asian countries.
VinFast has achieved an average localisation rate of over 60% with a target of surpassing 80% by 2026. Batteries for its EV range are currently supplied by leading global partners such as CATL and Gotion.
In addition, VinFast has established a joint venture with Gotion to build a battery manufacturing plant in the Vung Ang Economic Zone, in Ha Tinh province, while also investing in its own battery pack factory within the same industrial zone. These initiatives mark important steps toward localisation and ensuring self-sufficiency in battery supply in the near future.
The EV maker says that it places strong emphasis on a stable supply chain, particularly for critical components such as the batteries, to ensure it can meet growing demand for its EVs and lessen reliance on international suppliers. It says that disruption to global supply chains can affect production timelines and it is focused on minimising this risk through long-term contracts and the development of local suppliers.
The EV maker says that it places strong emphasis on a stable supply chain, particularly for critical components such as batteries, to ensure it can meet growing demand for its EVs and lessen reliance on international suppliers. It says that disruption to global supply chains can affect production timelines and it is focused on minimising this risk through long-term contracts and the development of local suppliers.
It also works with a wide network of freight forwarders to ensure timely delivery of components to its assembly lines. These include global logistics leaders as well as local Vietnamese providers. Amongst them are Hellmann, DSV, DHL, LX Pantos, Kuehne+Nagel, CNW Cargo Network, A.Hadrort and Scan Global.
VinFast’s export hub in India
In August this year VinFast inaugurated its first vehicle plant in India, on a 162-hectare site at the Sipcot Industrial Park in Thoothukudi, Tamil Nadu. The plant has begun assembling the VF 7 and VF 6 electric SUVs and its initial annual capacity is set at 50,000 units but with the facility is scalable enough to produce 150,000. The vehicles will be assembled from CKD kits sent from the Hai Phong plant in Vietnam.
At the inauguration ceremony Pham Sanh Chau, CEO of VinFast Asia, said the carmaker aimed to develop the Tamil Nadu plant into VinFast’s largest export hub for South Asia, the Middle East and Africa. “In fact, we’ve already secured initial orders from several countries across these regions,” he said. “In close collaboration with the Tamil Nadu government, VinFast is working to transform the area into the EV capital of South Asia – supporting both the dynamic domestic market and our broader regional ambitions.”
Outbound move
For domestic finished vehicle logistics, VinFast collaborates with an equally reliable range of providers with an eye on vehicle safety during transit, fleet capacity and specialised equipment as well as the ability to meet delivery schedules and cost efficiency. The company says these factors are critical to ensuring vehicles are delivered to dealers and customers safely, on time and efficiently.
Those providers include Phuong Anh and Tin Nghia, which have extensive fleets and facilities across north and south Vietnam. Local provider Minh Duc specialises in rescue trucks for urgent deliveries and emergency services and logistics provider Gia Truong is strong on routes through central Vietnam, according to VinFast.
The emphasis on safety and efficiency also applies to EV exports to international markets. In addition to compliance with technical and battery safety standards, VinFast emphasises sustainability throughout the finished vehicle logistics supply chain. This includes optimising transport routes to reduce carbon emissions, partnering with logistics providers committed to green practices, and investing in service infrastructure and charging networks in destination markets.
The carmaker says it is also intent on building Vietnam’s national brand image and strengthening customer trust to put Vietnam on the map as an EV export location.
Škoda begins Kushaq and Slavia sales in Vietnam from CKD imports
While VinFast is exporting CKD kits to India for assembly in Tamil Nadu, VW Group brand Škoda is sending CKDs in the other direction from its Parts Expedition Centre in Pune for assembly of the Kushaq SUV and Slavia sedan at its plant in Hai Phong in Vietnam. Following production trials earlier in the year Škoda started selling its Kushaq SUV model in Vietnam in July, the first Škoda model assembled in Vietnam for the local market, and the Slavia joined it there in September.
The CKD kits are shipped for export to Vietnam from Mumbai port in India to Hai Phong port, one of Vietnam’s largest seaports. Additional components are being supplied from Škoda’s Mladá Boleslav plant in the Czech Republic.
Škoda began selling vehicles in Vietnam at the end of 2023, beginning with the Karoq and Kodiaq models, which are exported there as completely built units (CBU) from the carmaker’s Czech Republic plant via Bremerhaven port.
Production and logistics partner
The Hai Phong plant was built in collaboration with regional partner Thanh Cong Group (TC Group) and was officially opened in March this year. TC Group is also working with Škoda on assembly, as well as handling all downstream logistics operations in Vietnam. That includes vehicle distribution for both CKD and CBU models.
“After successful internal validation and ramp-up preparations, distribution to dealerships began last week in connection with the official launch event,” says a spokesperson for Škoda. “The facility remains in the early ramp-up phase. We plan to gradually scale up scale up the production and the Slavia model will be integrated into the line in parallel. The plant’s modular design allows for further expansion based on market demand.”
The plant is equipped with a welding shop, paint shop and a final assembly line using the latest technology according to the carmaker. The line integrates advanced production techniques to enhance efficiency, quality control and durability, according to Škoda. These include contactless 3D measurement technology for precision quality checks. A four-layer paint application process and anti-corrosion wax treatment to improve vehicle longevity in Vietnam’s tropical climate.
There’s also a dedicated, 2km test track, designed to simulate local road conditions for real-world vehicle testing.
Lead time and pricing
In addition, Škoda says that localised CKD assembly offers several advantages including greater flexibility in adapting to local demand and allows the company to shorten lead times.
“More importantly, it benefits the Vietnamese market and economy as well,” says Škoda’s spokesperson. “CKD production enables us to offer European-standard vehicles at more accessible prices, while also contributing to job creation, skills development, and the long-term growth of the local automotive ecosystem.”
Škoda is looking to unlock growth potential in Vietnam and the wider Asean region. It will expand its dealership network to 32 locations across the country this year. The carmaker says that Vietnam is emerging as the country with the highest growth potential in the Asean region. The brand foresees annual sales of 30,000 units in the medium term, with that figure rising to more than 40,000 units after 2030. The capacity at the Hai Phong could be used in the future to expand production with a view to potentially exporting Škoda models across the entire ASEAN region, according to the carmaker.
“Through our partnership with Thanh Cong Group, we are helping to lay the foundation for a sustainable and competitive local industry, in line with the Vietnamese government’s automotive development strategy,” says its spokesperson.
Service parts logistics
In terms of the aftermarket, VinFast manages its own service parts supply primarily through official component suppliers, ensuring compliance with technical specifications and consistent product quality.
It says the share of domestically manufactured parts will gradually increase over time, subject to production capacity and market demand. At present, VinFast operates a nationwide network of more than 200 EV showrooms and dealerships, along with over 300 EV service workshops. In addition, the company manages nearly 500 electric motorcycle stores and close to 400 service workshops across the country.
VinFast says Vietnam is entering a new stage of automotive development. It believes the country’s high-tech industrial and manufacturing sectors will grow strongly in the coming years.
This year Vietnam is projected to sell more than 600,000 vehicles, according to market analyst InvestVietnam, with a sizeable percentage of that figure accounted for by EV sales, mainly from VinFast. However, for EV sales to continue increasing the country needs to invest a lot more in its EV charging infrastructure.
Vietnam also needs strengthen its local supply chains, where the localisation rate for parts remains between 7-10%, according to InvestVietnam, a fact that is hindering competitiveness against regional manufacturing neighbours such as Thailand and Malaysia.
For more insights into this market, look out for the ASEAN Automotive Logistics Market Report 2026-2036 – coming soon!
The ASEAN region is expected to be a growing, dynamic automotive market, presenting considerable opportunities, but investment in infrastructure and EV/battery supply chains will be essential to unlocking the region's full potential. Keep an eye out for the ASEAN Automotive Logistics Market Report 2026-2036 for more in-depth insights.
