Dri-VinFast: Vietnam Set to Launch Its Own Car
Vietnam is officially going to have its very own automobile brand soon. The country’s leading property developer Vingroup has just launched construction of a car factory in a project that’s worth US$1-1.5 billion in its first phase.
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Called VinFast, it is part of the group’s expansion into Vietnam’s heavy industry sector, after similar forays into retail and healthcare. Vingroup aims to become a top car manufacturer in Southeast Asia, and has set a target of manufacturing 500,000 cars per annum by 2025.
Car sales in Vietnam reached a new record as 300,000 new cars hit the roads last year.
Located in the northern port city of Haiphong, the new 335-hectare (827.8 acres) factory is fully capable of assembling vehicles from scratch: with chassis and engine assembly lines to painting rooms.
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The plant is expected to start operations in the second half of 2018 by making electric motorbikes, with the aim to accumulate experience in building electric motor vehicles. By the second half of 2019, according to Reuters, the company is expected to start producing 100,000 to 200,000 vehicles a year, including five-seat sedans and seven-seat SUVs.
To get started, VinFast has plans to buy blueprints of car engines and main mechanical systems from top European and American designers.
According to Nikkei Asian Review, VinFast is expected to be Vietnam’s second-largest automaker after Truong Hai Automobile, also known as Thaco, which is a contract manufacturer producing cars for South Korea’s Hyundai Motor and other big names.
Funding and Support
The project, which was symbolically announced on Independence Day, is expected to receive support from the Vietnamese government, which has long relished the idea of a domestic auto industry, according to the report by Nikkei Asian Review.
The company, which signed a memorandum to borrow US$800 million from Credit Suisse AG to build the factory, also plans to commission a noted Italian design house that does work for Alfa Romeo, Aston Martin and other automakers.
Vingroup might be able to take advantage of the abolition of tariffs among ASEAN countries, which is to take effect in January, as it would allow the import of cheap parts from other ASEAN countries, driving down productions costs.
However, this might also be a double-edged sword, as it will have to compete with neighbouring countries for tariff-free imports, which could pose a huge challenge for Vietnam’s fledgling auto sector.
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The new plant is also expected to benefit from the upcoming Lach Huyen international port, which is due for completion next year, and will enable large vessels bound for North America and Europe to stop at the port.
The company aims to make all vehicles compliant with European standards, which would allow them to take advantage of any future free-trade agreement with the European Union.
Vietnam’s foray into the automobile industry is not unique to Southeast Asia, with other neighbouring countries also boasting their own brands, such as: Angkor (Cambodia), which specialises in electric cars; Proton and Perodua (Malaysia); MADEI and Shan Star (Myanmar); and Thai Rung (Thailand).
The first VinFast cars are expected to hit the roads in the second half of 2019.
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