Made-in-Vietnam cars geared for East European roads

VinFast, the auto making subsidiary of real estate conglomerate Vingroup, will make cars suited to the domestic market first and target East Europe next.

Built in automated facility that deploys more than a thousand robots, the cars will be of top quality, priced competitively and backed with attractive offers and good after sales service, group chairman Pham Nhat Vuong said at a recent shareholders meeting.

Therefore, despite the presence of a number of big players in the domestic market, there was a good chance for cars produced by VinFast to succeed, he said.

He noted that Hyundai, the South Korean carmaker, was able to gain 10 percent of the US market share in a very short period, and VinFast was well placed to emulate such a feat.

Vuong stressed that the VinFast production line has a high degree of automation.

“Its body shop has a fully automated spot welding system with more than 1,200 robots in service.

Parts like crankshaft and transmission are also automatically manufactured, ensuring the car’s quality, and making engine run smoothly,” Vuong explained.

While promoting the cars in both domestic and foreign markets, the focus will be on “down-to-earth” consumers looking for value for their money, the chairman said.

VinFast will have a very good chance to compete well with carmakers in Eastern Europe as Vingroup understands this market very well, Vuong said. The group chairman is a former long-term resident of the former Soviet Union.

Vuong said automobile production will be the company’s spearhead in the coming time, but did not rule out the possibility of other products once the brand was well established.

“Given our supporting ecosystem and great capabilities, it [heavy industry] will be a new horizon for Vingroup,” said the chairman, who’s one among a handful of Vietnamese billionaires.

Last September, Vingroup broke ground on its subsidiary VinFast's new car manufacturing complex in the northern port city of Hai Phong. The complex would start manufacturing electric scooters in 12 months, sedans and SUVs in 24 months and electric cars in 3 years. By 2025, VinFast is expected to be producing 500,000 cars a year, making it a leading automobile manufacturer in Southeast Asia.

The company will 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 main components such as engines will be bought in from the U.S. and European companies.

However, VinFast will still cooperate with Vietnamese companies to manufacture most 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 would also include a research and development (R&D) center, is expected to attract European experts, and will be cooperating with many large R&D centers in Europe. The company will be using technology transfer contracts to help improve its expertise in product development.

Its cars will use eco-friendly technologies to meet Euro 5.0 and Euro 6.0 emission standards. VinFast will also be using green energy in its factories and plans to invest in a facility to treat used batteries.

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.