With India as its manufacturing backbone, Skoda Auto enters Vietnam, aiming to reshape the Southeast Asian car market.
07 Apr 2025 | 1101 Views | By Shahkar Abidi
It started with a series of quiet, determined steps—long flights, intense boardroom discussions, factory visits, and negotiations that stretched late into the night. Around 2019—roughly when Skoda Auto was crafting its India 2.0 strategy—the Czech brand was also looking for a path into Southeast Asia.
The Vietnamese market, with ...
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It started with a series of quiet, determined steps—long flights, intense boardroom discussions, factory visits, and negotiations that stretched late into the night. Around 2019—roughly when Skoda Auto was crafting its India 2.0 strategy—the Czech brand was also looking for a path into Southeast Asia.
The Vietnamese market, with its rapidly expanding middle class and growing appetite for automobiles, stood out. But the Skoda leadership knew that to break into it, it needed the right partner. It met with some of Vietnam’s most powerful industrialists, including executives from VinFast and others. Each potential partner had strengths, but something was always missing. The search felt like putting together a puzzle without the right corner piece. Then, in one of Hanoi’s high-rise offices, conversations with Thanh Cong (TC) Group took a turn.
Here was a company that knew the Vietnamese market inside out—one that had sold over 600,000 vehicles through its partnership with Hyundai and built a dealership network of 110 outlets across the country. Plus they already had ample land for further expansion into manufacturing activities. The chemistry was immediate. By November 2021, an MoU was signed, and a year later, the handshake turned into a firm contract.
In September 2023, Skoda officially entered Vietnam, not with an aggressive, capital-heavy investment, but through a carefully structured partnership that gave it a foothold without immediate equity commitments. For Skoda's parent company, Volkswagen Group, this was a win-win: brand expansion with minimal financial exposure. The partnership model remains unique. Unlike Skoda's ventures in India, where the company has taken direct equity stakes; in Vietnam, Skoda acts as a supplier of intellectual property, technology, and manufacturing guidelines.
A dedicated team on the ground ensures that Skoda's brand identity and quality standards are upheld, but the TC Group is in charge of factory operations and financial investments. While equity participation isn’t off the table, it’s a decision for another day. On March 26, 2025, a milestone moment arrived.
In Quang Ninh province, near Vietnam’s border with China, Skoda and TC Group inaugurated a brand-new manufacturing plant with an initial investment of $500 million. Series production of Skoda's popular Kushaq SUV has already begun, while the first locally assembled Slavia sedan is to be rolled off the line this summer from completely knocked-down (CKD) kits imported from India.
It’s a clever move, allowing Skoda to capitalize on existing investments while tapping into cost efficiencies. Vietnam’s taxation policies favour this approach, making it easier to bring in CKD components, assemble them locally, and potentially re-export vehicles to neighboring ASEAN markets in the future.
TC Group, known for its expertise in real estate, financial services, and industrial ventures, is also taking steps to develop a local supplier base. Vietnamese regulations require at least 40% localisation for vehicles before they can be exported, and this remains one of the final hurdles before Skoda can turn Vietnam into a regional export hub, particularly for the high growing ASEAN market.
"We’re not just assembling cars here; we’re creating a foundation for long-term success," said Klaus Zellmer, Chief Executive Officer of Skoda Auto, adding that the move leverages synergies with Skoda’s Indian operations. He did not specify the volumes of CKD kit that the company plans to import during the first few years from India. The facility, spread over 36.5 hectares, is part of the massive, 340-hectare Thanh Cong Viet Hung automobile complex.
It is equipped with advanced Europeanstandard technology—laser welding, 3D measurement, a four-layer paint application, and an anti-corrosion treatment that ensures longevity in Vietnam’s humid climate. The plant wouldn't have shaped up the way it has without the assistance of the 30-40 skilled professionals from Skoda's India facility, who remained present on the ground through the construction stage.
Additionally, the company sent a few of its cars to ARAI for testing purposes. Once fully functional, the plant’s annual production capacity will stand at 120,000 vehicles. Nguyen Anh Tuan, Chairman of the Board of Thanh Cong Group, stated: “The first Skoda Auto plant in Vietnam is the core project in the Thanh Cong Viet Hung Automotive and Auxiliary Complex, which has been well-planed and invested by Thanh Cong Group and aims to foster European automotive collaboration, enhance production and technology, and manufacture a diverse range of products, including new energy vehicles and electric vehicles, and specialized and custom design vehicles in the future.”
While the plant produces CKD models, fully built Skoda cars, like the Karoq and Kodiaq, continue to be imported from the Czech Republic to offer Vietnamese buyers a broader selection. At the same time, TC Group is investing heavily in the brand’s dealership and service network. Since its launch, Skoda has opened 15 sales outlets, with plans to expand to 32 dealerships by 2025.
Initial offerings in the country include SUVs like the Kushaq and Karoq, along with sedans like the Slavia and Superb. Looking ahead, electric vehicles (EVs) could enter the conversation as Škoda gains a stronger foothold. Skoda recently brought some ENYAQ iV models for testing in Vietnam. However, the leadership is keeping an eye on the electrification developments in the country, which at present mirrors global trends, with mass market adoption of EVs some distance away.
India-Vietnam Synergy
Skoda's move into Vietnam is deeply intertwined with its India strategy. The MQB A0-IN platform—the backbone of its Indian lineup—is also the basis for its Vietnamese expansion. As Skoda prepares to celebrate its 25th anniversary in India in 2025, it is doubling down on growth. Its "India 2.5" plan aims to push annual sales past 100,000 units by 2026 and grow its market share from 2% to 4%, with a long-term target of 5% by 2030.
Vietnam is the next logical step in this broader roadmap. The development should be seen in the context of the fact that Skoda is looking to make India and Southeast Asia its two growth engines after its exit from the Russian market following the 2023 attack on Ukraine and its planned withdrawal from China, where it faces stiff competition from local automakers.
With no foothold in the US; India and Southeast Asia have become a vital market for Skoda’s expansion beyond Europe. Martin Jahn, Skoda's Board Member for Sales and Marketing, played a pivotal role in expediting the Vietnam project, making it a top priority upon joining the company four years ago.
"We were just losing time, and we wanted to enter the ASEAN market as soon as possible," he admitted. Beyond India and Vietnam, Skoda sees an even wider export opportunity. The company envisions its India-built cars reaching markets in North Africa, the Middle East, ASEAN, Australia, and New Zealand We want to grow in these territories as much as possible," Jahn emphasized.
But success in emerging markets is never guaranteed. It will take years for Skoda to build deep brand recognition in Vietnam, where Japanese and Korean automakers already have a stronghold. The company’s ability to localize production, price competitively, and scale its dealer network will determine how far it can go.
Way Forward
Skoda's entry into Vietnam isn’t just about manufacturing; it’s about laying the groundwork for long-term success. Its strategy—leveraging India, forming a local partnership, and pacing its investments—gives it a solid foundation in a highly competitive market. Klaus Zellmer sees Vietnam as a "walk before we start running" market—one where the company will first focus on successfully launching key models before considering broader expansion.
Meanwhile, Japanese and Korean automakers dominate Vietnam’s streets, and brand recognition takes time to build. The real test for Skoda will be in its ability to price competitively, scale its dealer network, and, ultimately, win over Vietnamese buyers. Vietnam may be a latecomer to the global car boom, but its ascent is inevitable. And for Skoda, this could be the beginning of something big.