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(VEN) - From a young business in the field of automobile manufacturing, assembly and distribution, and after many years of persisting with its development solutions, the Xuan Kien Automobile Joint Stock Company (Vinaxuki) has affirmed its position as one of the leading auto manufacturers in Vietnam. Its efforts have not only brought good business results, but also proved that Vietnam is capable of developing the auto industry.
A dream of the Vietnamese
Vinaxuki was established in 2004 and at that time, it was a young business in the field of automobile manufacturing and assembly. Unlike other businesses concentrating on making a profit by importing foreign components for assembly in Vietnam, as soon as it came into operation, Vinaxuki has chosen its own way to go: promoting intensive investment in manufacturing auto components here in Vietnam. At that time, many people doubted the company would not succeed. However, with the local content of automobiles assembled in Vietnam growing year after year, Vinaxuki has proved the way it chose is right despite numerous difficulties.
Vinaxuki general director Bui Ngoc Huyen said that if domestic auto businesses concentrate on assembly, Vietnam will become just a factory of the world but cannot have its own automobile brands. Therefore, as soon as it was established, Vinaxuki has decided not to concentrate on assembly but to invest in technology to increase the local content of automobiles assembled in Vietnam. The company is looking towards the goal of raising the localization rate to 70-80 percent by 2017.
To achieve the above goal, Vinaxuki has built a localization roadmap consisting of three stages. In the first stage (2005-2008), the company concentrated on manufacturing tanks, cab moldings and chassis for trucks and cars. In the second stage (2008-2012), Vinaxuki concentrates on manufacturing moulds using a production line that consists of 30 digitally operated machines and Japanese technology. These include moulds used to manufacture cabs for cars, trucks, coaches and details such as engine covers, gearbox covers and differential covers. In the third stage (2012-2016), the company will invest in applying modern metallurgy technology to produce steel, cast iron, aluminum alloys from materials that are 90 percent available in Vietnam to manufacture 40-250kW engines for trucks, coaches, cars and components such as springs, chassis, cab, transmission axis, differential and gearbox.
Manufacturing moulds is the most difficult and costly work stage in the process of manufacturing automobiles. Aware of this, in 2004, Vinaxuki decided to invest nearly US$660 million in a mould factory with over 20 centers manufacturing cabs for cars and trucks. After that, the company invested in a tire manufacturing factory using modern equipment of Japan and China. Also, Vinaxuki has improved its e-coating line which has been recognized by Nippon (Japan) as the most modern and largest e-coating line in Southeast Asia. As a result of these investments, Vinaxuki has become the only business in Vietnam to provide truck tank coating services using the electroplating technology.
Since it was established, Vinaxuki has launched 38 truck models, two semi-truck models, two touring car models and two coach models with the local content ranging between 22-44 percent. Its goal for 2017 is raising the local content of 15 truck and coach models to 70-80 percent.
Convincing the Southeast Asian market
Along with efforts to realize the dream of creating Vietnamese automobile brands, Vinaxuki has strived to increase sales by 10-15 percent in the first 10 years and is looking towards the goal of exporting 30 percent of its output next year and 80 percent by 2023. Vinaxuki's export markets will include Association of South East Asian Nations (ASEAN) countries with preferential tax rates to take effect from 2018. Bui Ngoc Huyen said that if Vinaxuki's goal of localization is achieved, Vinaxuki will be capable to export many types of automobile to ASEAN countries at competitive prices (Vinaxuki automobiles will be manufactured with high technology to meet regional standards but the manufacture cost will be just 80-90 percent of that in other regional countries). In the near future, Vinaxuki will concentrate on exporting components or fully assembled automobiles to markets such as Laos, Cambodia, Myanmar and other countries in the region. After that, it will explore possibilities for exporting to other potential markets such as Africa and Latin America.
With a strong will and a well-oriented strategy, Vinaxuki has been successful, and its success proves that the dream of creating Vietnamese automobile brands can become true. It is hoped that by 2018 when a tax rate of zero percent is applied to exports between ASEAN countries, Vietnamese-brand automobiles will be present in the global market./.
By Nga Hang
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