Opinion | Can a real estate developer jump start Vietnam’s car industry?
- Within a year, VinFast has built a huge manufacturing complex and developed two prototypes that debuted in Paris. Can it keep up the pace?
Over the past three decades, Vietnam has looked to boost its levels of industrialisation by developing an indigenous automotive industry. Yet so far it is home to only a handful of assembly facilities and has few supporting industries to show for its efforts.
In 2002, the government set a target of increasing the localisation ratio – which refers to the proportion of parts used in final assembly that are not imported – for passenger cars to between 20 and 25 per cent within the next three years. By 2010, that figure should have been between 40 and 45 per cent. Yet in 2016, the average ratio for all vehicle types was just 10 per cent. Without localised production, the country’s automotive industry cannot provide the momentum for industrialisation that the government wants.
Hopes for an indigenous automotive industry were rekindled recently, however, when the Vietnamese conglomerate Vingroup announced plans for a locally produced car through its subsidiary VinFast.
Within a year, VinFast had built a 350 hectare manufacturing complex in the northern city of Hai Phong and developed two prototypes – a saloon and an SUV – that debuted at the 2018 Paris Motor Show to much fanfare. The company now plans to have its first model on the market this year.
Vingroup, chaired by Pham Nhat Vuong – the country’s first self-made billionaire – currently makes most of its revenue from real estate development. The group has also expanded into retail, health care, education and agriculture.
