Component suppliers are flocking to Vietnam to take advantage of burgeoning car and motorcycle production in the country.
According to Japan’s Nikkei Weekly, Bosch, among the biggest, plans to spend US$186m to expand its factory in Vietnam to make push belts used for continuously variable transmissions while Piaggio has recently opened an engine plant.
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Bosch will expand its CVT belt factory in Dong Nai Province in the south which is expected to have annual production capacity of 4.3m units by 2015, up from the current 3.2m.
The factory supplies CVT belts mainly to local carmakers, and also exports to Asian neighbours. Total investment in the Vietnamese factory, including the latest extension plan, is estimated at US$322m.
Bosch has also built a new R&D facility in Vietnam specialising in development of software technology embedded in vehicles. It will employ 700 engineers by 2015, up from 200.
Local company Truong Hai Auto, an OE supplier to Kia, has started building a US$250m engine plant in Quang Nam Province in the central part of the country. This will initially roll out 20,000 engines annually, rising in stages to 100,000.
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By GlobalDataProduction of parts for two-wheelers has also been expanding. The country is the fourth-largest two-wheel market in the world. Showa of Japan is building its second factory for motorcycle bumpers in Vietnam, at a cost of US$3.58m, and scheduled to go into operation in December.
Akebono Brake Industry has set up a joint venture with Astra Group, one of Indonesia’s leading business groups, to produce motorcycle disc brakes and other parts in Vietnam.
During the 1990s, Honda and Yamaha started motorcycle production in Vietnam, encouraging Japanese and Taiwanese parts makers to shift factories to the country. Along with local suppliers, the two motorcycle makers have raised local content to over 80%.
The Vietnamese government sees local supporting industries as a key measure to achieve its goal of transforming the country into a modern, industrialised country by 2020.
Last year it introduced a set of policies to promote development of such supporting industries.
