The presence of Chinese carmakers in Vietnam is increasing competition in terms of prices, technology and production as the market shifts from imported vehicles towards local manufacturing.

Cars imported from China were worth about US$ 1.26 billion in the first half of 2026, making China Vietnam's leading source of imported cars by value, according to data from the Department of Customs under the Ministry of Finance.

Chinese brands are competing with established manufacturers from Japan, South Korea and other countries. They have introduced SUVs, MPVs, and electric and hybrid vehicles with various levels of equipment at price points traditionally occupied by mainstream Japanese and South Korean models.

Established automakers have increased promotional activity, including cash discounts of up to VND 220 million (US$ 8,430) from Hyundai Thanh Cong, registration fee waivers from Toyota and extended warranties from Ford. Discounting is an established sales practice, while the introduction of Chinese models at competitive prices has added to pricing pressure across the market.

Several Chinese automakers are also establishing or planning production facilities in Vietnam, shifting from imported vehicle sales towards local manufacturing.

Chery, through its Omoda and Jaecoo brands, is set to begin production at a new factory in northern Hung Yen Province in mid-2026. The plant will initially produce 30,000-60,000 vehicles a year, with capacity potentially increasing to 200,000 units by 2030 and investment reaching US$ 800 million at full scale.

SAIC Motor, which operates the MG brand, is also preparing for local assembly. According to its Vietnam operation, the company is in discussions with partners regarding a plant and expects the project to be launched from late 2027.

Another production plan involves a partnership between Tasco and Geely Auto. Their joint venture is set to develop a CKD assembly plant at the Tien Hai Industrial Park in the former Thai Binh Province, now part of Hung Yen Province, with planned investment of about US$ 168 million.

The 30-hectare plant is designed to produce up to 75,000 vehicles a year in its first phase, including Geely and Lynk & Co models. The partners also plan to attract suppliers and develop an R&D centre serving the Southeast Asian market.

Local assembly could reduce logistics costs and provide greater control over supply. Its impact on Vietnam's automotive industry will depend on the extent to which the production chain develops locally.

According to an automotive expert, tighter US rules of origin were becoming a concern for Vietnam's automotive and supporting industries, as the country could face greater scrutiny over whether it was being used as a transit point for goods from third countries.

The expert said that incentives for foreign investment should be linked to technology transfer, local production and the development of Vietnamese suppliers.

"If they only open assembly plants, we will not learn much about technology," he told media sources, noting that Vietnam already has decades of experience in vehicle assembly.

This issue is relevant as the industry moves towards electric and hybrid vehicles. Batteries, electric motors, power electronics and software are becoming key components of the automotive value chain, while Vietnamese companies have limited involvement in several of these higher-value areas.

Bui Quoc Huy, deputy head of the Automotive Engineering Department at Phu Thọ College of Agricultural Mechanics, said Chinese manufacturers were competing through pricing and technological development.

"Chinese cars are competing through the speed of technological innovation and their ability to integrate technology into vehicles," he said.

The presence of Chinese manufacturers could increase the number of vehicle choices and technologies available in the Vietnamese market. It could also encourage manufacturers and suppliers in Vietnam to develop their products and services.

However, increased assembly capacity may not necessarily result in a stronger domestic supply chain.

Experts say Vietnam needs performance-based policies, including VAT and corporate income tax incentives, that reward companies for increasing local production, developing domestic suppliers, investing in R&D and transferring technology, rather than focusing mainly on the size of investment projects.

The expansion of Chinese carmakers is increasing competition in Vietnam's automotive market while raising questions about the development of the country's domestic supply chain. The longer-term impact will depend on the extent to which components, technology and value are produced locally.