Vingroup investing US$3.5b to make Vietnam’s first car in 2 years

HANOI: Vietnam’s largest real-estate company, Vingroup JSC, said it plans to invest up to US$3.5 billion (RM15 billion) to set up a manufacturing and research and development complex, aiming to roll out the first car in 24 months.

The developer will break ground on the first phase of the plant on Saturday, with a plan to make sedans, sport utility vehicles and electric cars in the future, Vingroup vice-chairman Le Thi Thu Thuy said.

“We want to create an affordable and high-quality car for Vietnamese,” she said.

Vingroup has signed a memorandum of understanding with a bank regarding a potential loan for as much as US$800 million, though it plans to fund most of the project itself, she said.

Vietnam’s ambitions are similar to efforts by companies in China and Malaysia, which have also tried to create cheaper, local brands to woo consumers.

Vingroup will face the same challenges as Chinese carmakers, which have struggled to win over buyers in the world’s biggest vehicle market, said Steve Man, an analyst for Bloomberg Intelligence.

Vingroup will appoint an executive from a global carmaker to be the car company’s chief executive officer. It wants to use Italian design houses and will rely on United States and European companies to help produce main components such as engines.

The car project is going to be a “very difficult” challenge, said Michel Tosto, head of institutional sales and brokerage at Viet Capital Securities JSC. It should seek a venture with a foreign carmaker, he added. Bloomberg