Automaker to distribute Indian cars in Vietnam following Tata deal

A leading local automobile company has become the official distributor of cars manufactured by Tata Motors Ltd., India"s biggest automaker by revenue, in Vietnam following a cooperation pact the two announced Monday in Hanoi.

The deal covers car distribution and supply and technology transfer between Tata Motors and TMT Motor Corporation, according to the Vietnam News Agency.

Starting in August, TMT will begin supplying commercial vehicles, such as buses and vans, produced by Tata Motors in Vietnam, before moving on to passenger cars with two to 16 seats, according to VnExpress.

The Vietnamese company will assemble Tata vehicles and receive technology transfers from its Indian partner in the ensuing phases of the pact.

It is thus likely that the Indian firm’s Tata Nano, known as the world’s cheapest car, will be distributed and assembled in Vietnam by TMT.

Made and sold in India, the four-door Tata Nano was unveiled in January 2008 with a dealer price of only 100,000 rupees (US$1,900), according to Reuters.

However, a Tata Nano would fetch below $10,000 if distributed in Vietnam, apparently because of taxes and fees, VnExpress quoted TMT chairman Bui Van Huu as saying.

TMT did intend to import some Tata Nanos for sale in Vietnam back in 2012, but the plan was later canceled, according to the Hanoi-based newswire.

The cooperation pact will help Tata Motors expand its network to Vietnam, while enabling TMT to increase its strength in the country.

The Mumbai-headquartered Tata Motors has auto manufacturing and assembly plants in India, Argentina, South Africa, Thailand, and the UK.

In 2004 the Indian automaker acquired South Korea’s Daewoo Commercial Vehicle, and took over British premium carmaker Jaguar Land Rover, which produces Jaguar, Land Rover and Range Rover, in 2008.

Tata Motors notched up a turnover of $39 billion in the 2014 fiscal year.

TMT, meanwhile, is one of the top-ten Vietnamese automakers. The company targets sales of 7,900 vehicles of all kinds this year and VND3.8 trillion ($175 million) in revenue, according to the Vietnam News Agency.

The Tata – TMT cooperation comes at a time when Vietnam’s automobile industry is under pressure to partially cut and completely lift the tariff barriers against cars imported from other countries in the ASEAN region from now to 2018.

ASEAN stands for Association of Southeast Asian Nations, including Indonesia, Malaysia, the Philippines, Singapore, Thailand, Brunei, Cambodia, Laos, Myanmar, and Vietnam.

By that time, there will be a very small price gap between imported cars and those assembled domestically, prompting some foreign automakers to weigh whether to continue assembling cars in the Southeast Asian country, with Toyota being a prime example.

The Japanese carmaker has proposed a series of tax breaks for locally assembled cars so that it can increase the localization rate and open new factories in Vietnam after hinting that it may stop making automobiles in the country by 2025 over the said reasons.

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Automaker to distribute Indian cars in Vietnam following Tata deal

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