Vietnam is getting into the car business with its own brand.
Real-estate conglomerate Vingroup JSC’s auto unit VinFast marked the rollout of its first vehicles from its assembly line on Friday, embodying the aspirations of the fast-developing country’s government to build a modern manufacturing sector.
“This makes a great contribution to the national economy,” Vietnamese Prime Minister Nguyen Xuan Phuc said in a speech during a ceremony at VinFast’s complex of six automated factories constructed in 21 months in the northern port city of Haiphong. “It affirms the Communist Party’s policy that the private sector is a very important driver of the economy. I want VinFast to go to the regional and global markets.”
VinFast will start delivering cars to customers Monday. It wants to be the first Vietnamese company to succeed at challenging foreign competitors such as Toyota, Ford and Honda in one of the world’s fastest-growing economies. Xuan Kien Automobile, known as Vinaxuki, failed to win over brand-conscious Vietnamese with its local car models before folding in 2015.
The first VinFast rollout, a hatchback named Fadil, is initially priced at 394.5 million dong ($16,900). Vingroup said in 2017 it planned to invest up to $3.5 billion in its auto business. The company will also produce a sedan, sport utility vehicle and electric motorbikes.
The new automaker, though, faces challenges in Vietnam’s aspirational culture.
“Product quality is a concern” among consumers, said Truc Pham, a senior analyst at ACB Securities JSC in Ho Chi Minh City. “Vietnamese people favor foreign brands for high-value products. It will take years for customers to accept a new local brand.”