Vietnam's low-cost automaker Thaco set for growth spurt
Company is branching out into farming machinery
ATSUSHI TOMIYAMA, Nikkei staff writer
HANOI -- Truong Hai Auto, known as Thaco, is poised to take off as the Vietnamese automobile market's growth accelerates.
Vietnam's new-car sales surpassed the 300,000 vehicle mark for the first time in 2016, indicating that full-blown growth is around the corner.
"We were late to enter the industry, so we weren't sure if anybody would buy cars made in Vietnam," said founder and Chairman Tran Ba Duong, looking back at the company's establishment in 1997. Such auto powerhouses as Toyota Motor, Ford Motor and General Motors were already operating in the Southeast Asian country.
Even within its primary business of knock-down car production, Thaco has worked toward using more parts from local suppliers and adding its own improvements. It now procures 20% to 50% of parts, mostly for trucks and buses, from domestic suppliers. This has lowered production costs, enabling Thaco to sell its cars for 5% to 10% less than foreign peers' vehicles -- both locally built and imported.
Duong, 57, was born in Hue, a central Vietnam city that was devastated in one of the bloodiest battles of the Vietnam War. He was in elementary school when the North Vietnamese launched the Tet Offensive in 1968. With a desire to help war victims with economic development, Duong chose to base his company in the province of Quang Nam, another war-scarred region.
Thaco is launching a farming machinery business in October. Vietnam's agriculture has yet to be fully modernized, and the company wants to produce low-cost, high-quality equipment to assist farmers.
Toyota cars are hugely popular in Vietnam, taking a 21% share of the market last year. "We want to build cars that would surpass Toyota one day," Duong said.