The first Vietnamese-brand car grabbed considerable attention at the Paris Motor show in 2018. It wasn’t just because of its eye-catching design. The idea of a new car manufacturer coming out of a developing country surprised many, especially at a time when the industry was facing radical change and fierce competition. NHK reports.
Establishing a brand
In June, eager buyers in Hanoi took delivery of the first cars made by Vietnam’s VinFast. On weekends, the company offers people a chance to test-drive a car bearing their country’s first home-grown marque.
VinFast completed a factory in 2017 in the port city of Hai Phong, about a two-hour drive from Hanoi. That was just a year and half after the company was established by Vingroup, one of Vietnam’s biggest conglomerates.
The plant’s production systems are powered by artificial intelligence, and the company expects the facility to produce 250,000 cars a year.
Vo Quang Hue, who is Vingroup’s deputy CEO and also in charge of VinFast, says the company is forming a foundation for an automotive industry in Vietnam and wants to eventually export the brand.
Prime Minister Nguyen Xuan Phuc attended VinFast’s factory opening ceremony and praised the company as patriotic. The government hopes an integrated automobile industry will create a vast number of jobs and establish a supply chain that will bring more advanced skills to workers.
Supporting local suppliers
VinFast has invested heavily in local partners. It has teamed up with An Phat, a plastic products manufacturer. Their joint company, VinFast-An Phat Plastic Auto Part Co., makes battery covers and other plastic parts for cars.
The carmaker also founded a training school jointly with the German Industry and Commerce in Vietnam. Two-hundred students are learning to become mechanical and mechatronics engineers with instruction from top professionals in the auto industry.
Do Tu Tai, a 19-year-old trainee, had to pass a tough exam to get into the school. He is from a small town near Hai Phong. Tai gets a monthly salary while training and he’s guaranteed a job at the VinFast plant or other factories upon graduation.
Long road ahead
However, creating a national brand car comes with some huge challenges. Vietnam has a long way to go to establish a parts-supply system.
Few senior engineers at the factory are yet locally hired. The company has recruited staff from among 22 countries across the world.
And Kazuo Ishikawa, who is an industry expert and professor at Senshu University, says there is little incentive to build a car industry in Vietnam because there are already established ones in nearby Thailand, Indonesia and Malaysia. He says these can serve Vietnam because auto tariffs within the ASEAN market, which includes all four countries, are zero.
But Vingroup thinks otherwise. It says the free trade agreements Vietnam has concluded with non- ASEAN nations are an incentive for global carmakers. Under such deals, the companies will be able to produce cars in Vietnam and ship them abroad at lower tariffs.
VinFast’s business is at the starting line at a time when the number of people in Vietnam who can afford a car is rapidly accelerating. But it remains to be seen how many buyers will be swayed by the opportunity to own a Vietnamese-brand automobile.
The company is also looking beyond the car industry. It says the technologies that are developed in the automotive factory can be applied to the medical sector and other fields. The firm also says its main competition will be within the electric car market. VinFast’s first electric vehicle will be on the road in 2020.