Geared towards improving localisation: Toyota Motor Vietnam

Toyota Motor Vietnam Co., Ltd (TMV), one of the first automobile joint ventures in Vietnam, is continuously making efforts in expanding localisation by seeking investments from domestic auto parts companies, including Global Toyota. Thus, TMV has achieved the highest localisation rate compared to other automobile makers in Vietnam.

INTERNATIONAL METALWORKING NEWS FOR ASIA interviewed Mr. Pham Anh Tuan, General Manager of Business Planning, Government Affairs, Technical Affairs and Legal Division Sales and Service Group, Toyota Motor Vietnam Co. Ltd.

Mr. Pham Anh Tuan

IMNA: Tell us something about Toyota Motor Vietnam

Tuan: Toyota Motor Vietnam is a leading automaker in Vietnam established in 1995 as a joint venture company between three parties: Toyota Motor Corporation (Japan) 70%, VEAM (Vietnam Engine Agriculture Machinery Corporation) and Kuo (Singapore). TMV assembly factory is located in Vinh Phuc province, 40km from Hanoi with a production capacity of 50,000 units/year. It employs nearly 2,000 workers and 49 dealers nationwide. In addition, TMV achieved No. 1 customer satisfaction for both sales and service (SSI and CSI) in 2017 according to JD Power survey.

IMNA: Recently, TMV sales volume increased by 3% according to reports. What is the reason behind the success you achieved?

Tuan: TMV sales in April was 4,234 units, an increase of 3% compared with the same period last year. Thanks to the increase of (completely knocked down) CKD vehicles, especially Vios with sales of 2,076 units in April, 89% higher than last year. Meanwhile, Innova reached sales of 1,300 units in April, up by 44% from 2017. This achievement lead towards TMV’s goal of promoting local production, in line with customers’ preference and Government policy.

IMNA: What do you think is the difference among the auto market of Thailand, China and India?

Tuan: Tremendous potential is seen in Vietnam for automobile industry with 96 million people and a US$2.385 million GDP/capita in 2017. The total automobile in operation is about 2.8 million, in which only about 3% people own a car. Motorisation is expected to materialise in Vietnam around 2025, expecting many people to shift from motorcycles to cars. However the current car market size is still very small, with total sales of 350,000 new cars a year. Moreover, the automobile market is forecast to increase quickly after 2025, reaching one million sales by 2030.

IMNA: In the process of key auto parts making in TMV plant, such as engine and driving system components manufacturing, do you apply any advanced metal cutting technology?

Tuan: In TMV factory, we have four main production processes: stamping, welding, painting and assembly. At the moment, TMV does not apply any advanced metal cutting technology yet.

IMNA: Do you think Toyota will apply new technologies, such as laser welding, laser brazing and soldering, hydroforming and hot stamping in the future?

Tuan: Certainly in the future, together with market expansion, production and localisation enhancement, TMV and our suppliers will need more advanced metal technology, such as laser welding, laser brazing and soldering, hot stamping, 4D printing.

IMNA: Lean manufacturing is the core of the development in industry competition. What is your successful experience on that area; are you also applying Industry 4.0 concept in your production plant?

Tuan: In TMV, lean manufacturing is based on just-in-time concept, where ordering is a pull system, not push system. We place an order to production based on customer’s need. For example, product, amount and timing. In this way, TMV can minimise stock, reduce investment and increase efficiency. With minimum stock or zero stock, we can quickly change our production and adopt to any sudden changes in the market, such as customer demand, buyer preference, Government policy, and competitor’s activities. Industry 4.0 or automation is also another key point in Toyota production system. However, application of automation at TMV factory is still limited to automatic delivery vehicles (AGV) of CKD parts from warehouse to production stations or from a production station to another.

IMNA: With regards to Human Resources, what has been Toyota’s strategy over the past twelve months with regards to recruitment, training and retention of skilled Vietnamese workforce?

Tuan: TMV conducts young talent recruitment in collaboration with various universities and Toyota Technician Education Program (TTEP) schools. For employees, we perform on-the-job training activities, like basic production skills training, Toyota Production System (TPS), and Toyota way done by our internal instructors.

IMNA: What changes have you seen in the market throughout the years? Any advice to companies considering market entry into Vietnam?

Tuan: Vietnam is a very promising market for the automobile industry. The Government is keen on automobile development and it’s supporting industries. However at present, the industry is facing difficulties due to market size, production volume, including 0% import tariffs from ASEAN, which poses a major challenge for domestic manufacturers. On the other hand, Vietnam Automobile Manufacturers' Association (VAMA) urges the Government for a stable policy to achieve steady market expansion in the coming years, and to attract investments, as well as reduce cost. Nonetheless, now is the perfect time for anyone to invest in the automobile industry as it approaches motorisation in 2025.