Unrealistic hope
After several years of attempts, Viet branded automobile dream of Vinaxuki was extinguished, whilst Hyundai - Thanh Cong joint venture and Truong Hai Auto Corporation still have to cooperate with foreign partners to turn out foreign cars branded Hyundai or Mazda, Peugeot.
On last September 2nd, VinGroup kicked off its electric automobile and motorbike manufacturing complex named VinFast located in Dong Bai commune, Cat Hai district, Hai Phong city, officially entering into the local automobile production industry together with Hyundai - Thanh Cong and Truong Hai Auto.
VinFast has an area of 335 hectares, manufacturing internal combustion engine attached automobile, electric cars and motorbikes, amounting to the total investment capital of US$3.5 billion.
Viet branded automobile dream has remained unfinished for a long time
Before VinFast, Truong Hai Auto and Vinaxuki were two pioneers of manufacturing made-in-Vietnam cars but Vinaxuki had to stop its dream due to difficulties.
At the automobile exhibition in 2012, Bui Ngoc Huyen, president of Vinaxuki debuted its made-in-Vietnam VG ('Vietnam Graceful') branded cars which had a local content ratio of 50 per cent as announced.
From the first presence in 2012, Vinaxuki was scheduled to sell out around 200 units during two years from 2012 to 2014 with price of VND310-350 million (US$23-US$25,000) each. However, the sale target of first made-in-Vietnam cars was not reached due to indebtedness of Vinaxuki.
In March 2017, Truong Hai Auto inaugurated to build an establishment of Thaco Mazda branded cars in Quang Nam province. The factory had a capacity of 100,000 units per year with its total investment capital of VND12,000 billion (US$530 million) and expected to export its cars to Laos, Myanmar.
Apart from that, Thanh Cong Group also signed cooperation agreement with Korea headquartered Hyundai Motor Corporation in establishing a joint venture to expand production of Hyundai branded cars in Vietnam. Accordingly, Hyundai Thanh cong joint venture is located in Ninh Binh province with a production capacity of 40,000 units per year and put into operation as of 2018. The joint venture is planning to satisfy with domestic demands and target for export of made-in-Vietnam cars to ASEAN countries.
With impressive business outcomes, presently Truong Hai Auto and Thanh Cong Group are contributing a relatively big sum to the state budget in Quang Nam and Ninh Binh provinces, equivalent to around VND25,000 bilion (roughly US$1.12 billion) per year.
Though Truong Hai Auto has become the leading private firm of auto production with No.1 rank accounting for over 40 per cent of market shares of consumed cars volume and Thanh Cong Group continues keeping its plans ahead for export, dream of made-in-Vietnam cars remains unfinished.
Both Hyundai Thanh Cong and Truong Hai Auto are mainly assembling cars and their local content ratio making up nearly 50 per cent.
VinFast revives Viet branded auto?
With a relatively detailed plan for the US$3.5 billion invested project,VinGroup once again lights up a flash of hope of Viet branded cars. Its schedule aims at turning out first electric motorbikes by 2018 and first Viet branded cars by 2019 to the market. As the Prime Minister Nguyen Xuan Phuc affirmed in his speech delivered at the ground breaking ceremony of VinFast, if VinGroup reached its schedule, it would be a gigantic attempt.
According to VinGroup, made-in-Vietnam cars rolled out by VinFast will have a local content ratio of 60 per cent, meeting requisite standards of being entitled to preferential duty at zero per cent in export to ASEAN countries. Up to 2025, VinFast will reach its designed capacity of 500,000 units per year and become the leading auto firm of ASEAN.
VinGroup also stressed that there were presence of many world leading corporations. Particularly, Swiss based financial group Credit Suisse AG will arrange a loan of US$800 million for VinFast; Bosch - the world leading automotive spare part supplier will involve in its process of product development. Also, VinFast will cooperate with both Bosch and Siemens with regards to generation of workshop operation and management system, towards the technology generation 4.0.
The initial product design will be responsible for by foreign partners. Engines and body frame systems are being cooperated by the US and European designers. Automotive designs are created by prestigious studios of Italy such as Pininfarina, Zagato, Torino Design and ItalDesign, who have also designed for cars branded Lamborghini, Ferrari, BMW, Mercedes, Audi.
VinFast was located in the economic zone Dinh Vu - Cat Hai. This is the offshore economic zone in Cat Hai island district linking Hai Phong city via Southeast Asia's longest cross-sea bridge Tan Vu - Lach Huyen.
The automobile production project of VinGroup will settle around 25,000 jobs and contribute greatly to the state budget of Hai Phong city. It is estimated that VinFast will contribute around VND4,500 billion (roughly US$200 million),VND11,500 billion (US$500 million) and VND20,000 billion (US$900 million) to state budget of Hai Phong city in 2018, 2021 and 2025, respectively.
However, according to industry experts, VinGroup will have to cope with challenges and difficulties from Chinese auto manufacturers in its attaining market shares in Vietnam as well as Asean countries.
Also, it has to deal with inevitable difficulties of ASEAN originated cars which will take advantage of preferential duty of zero per cent to import in Vietnam.
