Former GM exec gets behind wheel of Vietnamese real estate group's car manufacturing venture

By Duc Huy   September 27, 2017 | 03:42 pm GMT+7
Former GM exec gets behind wheel of Vietnamese real estate group's car manufacturing venture
Vehicles on a street in Ho Chi Minh City. Photo by VnExpress/Duy Tran

VinGroup has ambitious plans to put its newborn auto firm on top of Southeast Asia.

Vietnamese real estate conglomerate Vingroup JSC has appointed a former executive of U.S.-based auto giant General Motors as the CEO of its new car-manufacturing subsidiary VINFAST.

James B. DeLuca worked as executive vice president for global manufacturing, manufacturing engineering, and labor relations for GM from February 2014 to September 2016 after holding different managerial positions in the company since 2000.

He will be responsible for building, operating, and developing auto manufacturing (excluding electric motorcycle) of VINFAST.

"Vietnam is a country with great potential in the field of auto manufacturing where the demand of the domestic market is expected to be approximately 450,000 - 500,000 vehicles by 2020 and increase to 800,000 - 900,000 vehicles by 2025," DeLuca was quoted in a press release as saying.

"Vietnamese enterprises are also trying to join the global production network. Therefore, my associates and I in VINFAST will do our best to achieve the target of launching automotive products in September 2019", he said.

Before DeLuca, VinGroup surprised the domestic auto industry by recruiting Vo Quang Hue, former CEO of auto component maker Robert Bosch Vietnam, as deputy CEO of VINFAST.

VinGroup started building VINFAST's car factory in the northern port city of Hai Phong earlier this month, and with its latest personnel decisions, it looks like the group is leaving no stone unturned to materialize its ambition: making VINFAST a leading player in Southeast Asia's auto market.

The 335-hectare (828-acre) manufacturing complex, estimated to cost $1-1.5 billion for the first phase, will start producing electric scooters after 1 year, sedans and SUVs after 2 years and electric cars after 3 years.

By 2025, VINFAST is expected to be producing 500,000 cars a year.

VINFAST has signed a memorandum of understanding with a Swiss investment bank regarding a potential loan for as much as $800 million, though it plans to fund most of the project itself, according to Bloomberg.

The company will also be working with German partners in product development and management of the new manufacturing complex. Its cars will be designed by Italian design houses, while the main components such as engines will be bought in from the U.S. and European companies.

However, VINFAST will still employ Vietnamese companies to manufacture most of its car accessories. The company's products will have a localization rate of 60 percent, making them qualify for tax incentives when exported to other countries in the region.

The new complex, which will also include a research and development center, is expected to create 25,000 new jobs and boost the economy in Hai Phong City's island district of Cat Hai.

Vietnam will emerge as the second fastest-growing production hub for cars in Southeast Asia after the Philippines between 2017 and 2021, according to BMI Research, a part of Fitch Group.

From 2018, tariffs on automobiles imported from Southeast Asian countries will be cut from the current 30 percent to zero, which is likely to hurt the local auto manufacturing industry in the short term, according to BMI.

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