VietNamNet Bridge – Vindaco, which assembles and sells products with the Daihatsu trademark, a member of the Vietnam Automobile Manufacturers’ Association (VAMA), on June 11 announced it would stop operating in Vietnam.
 | | Terios, one of Vindaco's models | The full name of Vindaco is Daihatsu Vietindo. A source said that the proposal on dissolving Vindaco was made on June 6 at the joint venture’s management board’s meeting, which includes representatives from Vietnamese, Japanese and Indonesian partners.
This is the first time VAMA has seen a member company dissolve since its establishment in 2000.
Analysts said that unsatisfactory business performance was the main reason behind Daihatsu’s decision to stop assembling vehicles in Vietnam. Daihatsu’s products in Vietnam, including the sports utility vehicle (SUV) Terios and two other models, CitiVan and Hijet Jumbo, are not enough to keep the manufacturer operating in Vietnam. The manufacturer has been selling only 625 Terios a year in its four years of operation, far below the targeted level of 1,000 units a year.
In the first five months of the year, the joint venture sold 173 units, holding 0.8% of the market share. The total number of sold cars is 4,748 units since it joined VAMA, holding 1.8% of the market share.
A source said that in addition to the problems in business performance, the joint venture decided to shut down also because the Japanese partner, Daihatsu, did not have a voice in the joint venture. With the capital contribution at 26% of the total capital, Daihatsu cannot have the decisive voice in programming the joint venture’s plans.
Meanwhile, an official of the Ministry of Industry said he suspected that the partners in the joint venture were not united in defining business strategies. Regarding the issues of the joint venture after the dissolution, he said that the interests of labourers would depend on the provisions of the joint venture’s contracts and its operation regulations.
According to the Ministry of Industry, Vindaco’s plant employs 132 labourers. Moreover, the number of labourers who are involved in the distribution chain may reach 200.
As for Daihatsu, the Japanese company may seek another Vietnamese partner and set up a new legal entity.
Under current laws, automobile manufacturing is not a field that limits investment, and investors just need to prove their capability to be eligible to get investment licences. The licencing is conducted by local authorities. In case Daihatsu signs a contract on technology transfer to a Vietnamese company, the two sides do not need to ask for permission from state management authorities.
Vindaco was granted an operation licence in April 1995 and began operating in May 1996. This is a 5-partner joint venture, including Vietnamese Transico (which makes 33% of capital in land use right), and Japanese Daihatsu (26%). Two other partners come from Indonesia, PT Astra International Tbk, and PT Mitra Andasantika. The fifth partner comes from Japan, Kanematsu Corp, which made 2% of capital contribution.
As stipulated in the licence, Vindaco has the legal capital of $30mil and investment capital of $32mil. The sale and post-sale systems have the investment capital of $35mil.
(Source: VNE) | 
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