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Hyundai & Thanh Cong to form auto production JV

Released at: 10:01, 31/03/2017

Hyundai & Thanh Cong to form auto production JV

Photo: hyundai-thanhcong.vn

Joint venture part of Hyundai Motor’s strategy to expand global production base, with ASEAN as a potential market.

by Nguyen Quoc

The Thanh Cong Group signed a cooperative agreement with South Korea’s Hyundai Motor Company on March 30, under which a joint venture between the two will be created to expand the assembly of automobiles in Vietnam.

Mr. Le Ngoc Duc, Director General of the Hyundai Thanh Cong Company under the Thanh Cong Group, was quoted by the Vietnam News Agency as saying that Hyundai Motor selected Thanh Cong as its partner in the region based on the group’s achievements in past years.

The joint venture is also part of Hyundai Motor’s strategy to expand its global production base, with ASEAN as a market of potential.

The decision comes at a time when the deadline for the reduction of import tariffs on completely-built-unit (CBU) imports from ASEAN countries to zero is approaching, in 2018, under the ASEAN Trade in Goods Agreement (ATIGA).

According to Mr. Duc, this is a chance for the Thanh Cong Group to develop the local support industry, a move in line with the development strategy for the auto industry approved by the government.

In the initial phase, the Hyundai - Thanh Cong Joint Venture will maintain an existing factory with a capacity of 40,000 vehicles per year in northern Ninh Binh province and invest in expanding it in the near future, using modern technologies from Hyundai. 

With the joint venture, the rate of completely-knocked-down (CKD) vehicles among Hyundai’s products available in Vietnam will increase from 20 per cent to 80 per cent in the latter half of 2017 and 90 per cent in 2018. 

Hyundai Thanh Cong also aims for a localization rate of 40 per cent, to be eligible for the zero per cent tariff rate when exporting its vehicles to other ASEAN countries.

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