Competition carmakers should heat up as investors submit licence applications to make automobiles in Vietnam. The Vietnam Manufacturing and Export Processing Co Ltd (VMEP) has applied to build a production line at a cost of about US$70 million as part of its expansion plans, a source from the Ministry of Planning and Investment told Vietnam Investment Review.
This project would raise VMEP’s current investment capital from US$160 million to more than US$230 million to make six-to nine-seat cars and light trucks. It would also entail building an engine factory, the source said.
“The investor plans to make 10,000 cars and light trucks in the early stages of the project and a corresponding number of 1,300 to 1,500cc engines,” the source said.
“The production output would likely be increased later depending on market demand,” he added.
The project is expected to eventually receive government support as VMEP has already demonstrated its commitment to the Vietnamese market in motorbike production.
“The manufacturer has endeavoured to increase the ratio of locally made parts of their motorbikes to one of the highest among makers in the industry,” the source said.
VMEP has been hailed for successfully drawing several investors to Vietnam to develop a satellite network of suppliers. Its expansion into automobiles is hoped to attract more investors to Vietnam to supply its car components.
A number of other investors have expressed willingness to enter the domestic automobile industry.
South Korean firm Daewoo recently resubmitted an application to set up a bus-manufacturing factory in Vietnam, after being rejected by local authorities as the carmaker initially only planned to assemble vehicles.
The investor has earmarked the northern province of Vinh Phuc as the location for the bus plant Vietnam has opened up to foreign automobile makers following bilateral and multilateral agreements it has signed with other countries.
Last week, the government awarded an investment licence to Honda Vietnam to become the 12th foreign-invested carmaker in Vietnam.