Explore the hurdles Thaco faces as it prepares to launch Vietnam’s first domestic car brand in 2027 – from fierce competition to shifting tariffs. Learn more now!
In his New Year address, Thaco Chairman Trần Bá Dương announced plans to unveil a wholly Vietnamese car brand by 2027. The move signals a bold shift: from being a distributor of global marques to creating a home‑grown marque that could reshape the local automotive landscape.
Ambitious Plans Meet a Crowded Market
Today Thaco distributes Kia, Mazda, Peugeot, BMW and MINI in Vietnam, and is soon adding Jeep and RAM. Its assembly plants already localise models from these brands, benefitting from reduced registration fees and other incentives.
Launching a domestic brand, however, means stepping out from behind well‑known logos and competing directly with both assembled and fully imported vehicles.
Tariff Changes and Rising Import Pressure
Historically, high import duties protected locally assembled cars. Recent trade agreements are easing those barriers. Under the ASEAN Trade in Goods Agreement (ATIGA), cars from Southeast Asian nations enjoy zero‑tariff status until the end of 2027.
The EU‑Vietnam Free Trade Agreement (EVFTA) has cut European car duties from around 30‑35% to roughly 24‑29%, with larger‑engine models slated for 0% duty between 2027‑2029.
Similarly, the Comprehensive and Progressive Agreement for Trans‑Pacific Partnership (CPTPP) will eliminate tariffs on Japanese cars over 3.0 L from 2029, while sub‑3.0 L models wait until 2032.
As duties fall, premium brands such as Mercedes‑Benz are already pivoting back to pure imports, and manufacturers like Toyota, Honda and Mitsubishi are eyeing selective import strategies. This surge of imported models intensifies pressure on any new domestic player.
The Size and Dynamics of Vietnam’s Car Market
Vietnam’s automotive market remains modest compared with regional heavyweights like Thailand, Indonesia, or China, and far from the scale of the United States, India or Europe. Nonetheless, Vietnamese buyers now have access to close to 20 mainstream brands.
In the past two years, an influx of electric vehicles—many from Chinese manufacturers—has turned Vietnam into a fiercely competitive arena, forcing every player to innovate on design, technology, price and promotional offers.
Consumer Priorities: Space, Quality, Tech, and Price
Online forums reveal a clear hierarchy of buyer preferences: roomy interiors, strong build quality, advanced technology, safety features, and a reputable badge. But the decisive factor is often the resale value and, most critically, an affordable purchase price.
For a brand that is new to the market, price competitiveness will likely dictate the scale of launch promotions, cash‑back schemes and even full coverage of registration fees.
Financial and Development Hurdles
Bringing a new model to market demands heavy investment in research and development, tooling, production facilities, and marketing. Early‑stage promotions can strain cash flow, especially if the brand opts for aggressive discounts to gain market share.
Beyond initial launch costs, ongoing expenses include supplier negotiations, after‑sales service networks, and compliance with evolving emissions and safety standards. A mis‑step could force the brand into early losses, testing Thaco’s willingness to “play for keeps.”
Future Outlook
2027 may mark the peak of Vietnam’s electrification wave. If Thaco’s first offering is a conventional gasoline SUV, it could face steep competition from hybrid and fully electric alternatives already gaining traction.
Success will hinge on delivering a product that meets local expectations for space, quality, technology, and price, while navigating tariff shifts, import competition, and substantial financial commitments.
Only time will tell whether Thaco can turn its ambitious vision into a sustainable Vietnamese automotive champion.