VinFast: Vietnam’s first car company has big ambitions

With two concepts set to debut this fall in Paris, VinFast has audacious plans to begin production at its rising Haiphong plant in spring 2019.
Our helicopter dives through the heavy rain clouds, banking sharply as it races towards the waterfront in Haiphong Harbor, rotor blades whop-whop-whopping as we come in just above tree-top level. For an American Baby Boomer, it’s hard not to have images of U.S. Army Hueys flash across the mind’s TV screen from nearly a half-century back as we level off and swing a lazy circle around the massive construction project.
Barely a year ago, 40% of the 827-acre site was still underwater. There’s still plenty of mud and debris, workers racing to pull things together. They don’t have time to waste, considering the plan is to have the manufacturing complex up and running before mid-2019.
Vietnam’s economy is expected to grow as much as 7% annually in the near-term, and with a population of around 90 million, its automotive market is expected to surge rapidly from the current 300,000 annual pace. And where sales are dominated by brands like Toyota and Hyundai, Pham Nhat Vuong is determined to grab a share for his new company, VinFast, which aims to become Vietnam’s first major carmaker.
Vuong is the Vietnamese Horatio Alger. Twenty-five years ago, he borrowed $40,000 to launch a noodle company in the Ukraine, later selling it to Nestle’s for $150 million. That funded what is now Vingroup, a conglomerate worth over $10 billion. It operates 57 high-end shopping malls, a score of apartment and resort complexes, schools and hospitals. And now, Vuong is set to build cars.
VinFast has released a handful of teaser images, but it’s scheduled the official unveiling of its first two models—a midsize SUV and a similarly sized sedan—for the 2018 Paris Motor Show. Production at the new Haiphong plant is scheduled to begin in spring 2019. It is, without overstatement, an audacious plan.
And, “it drove me out of a comfortable retirement,” says Jim De Luca, the long-time General Motors executive (left) who joined VinFast as CEO in 2017, after more than a decade in Korea and China. “This is more than the launch of two vehicles. This is going to be big,” he says with near-missionary zeal from VinFast’s circular headquarters in Haiphong.
Considering it’s one of the few buildings yet finished, it’s difficult to imagine how VinFast will meet its timetable—which also calls for the production of electric scooters, an EV and a city car by autumn 2019. But everyone on a team of American, European, Australian and Asian auto-industry veterans is determined to live up to the operative word in the company’s name: “Fast.”
“We’re doing in 24 months what most OEMs need up to 60 months to do,” DeLuca explains. VinFast has lined up a list of partners including ABB, AVL, Bosch, EDAG, LG Chem, Magna Steyr, SAP, Siemens and Thyssen Krupp, to name a few. But it’s not a CKD manufacturer, emphasizes Kelvin Fisher, the vice president of engineering, noting the complex includes both a stamping and engine plant.
Dave Lyon, a former GM designer, offers one insight of how it can come together. He asked several European design houses to compete. Then, in an unusual step, VinFast asked the Vietnamese public to vote on their two favorite designs. Pininfarina won. Once the winners were chosen, Lyon says, final design work was completed digitally, “with no clay models to slow us down.”
If there’s a sense of déjà vu, BMW provided the underlying architecture for its 5-Series and X5. The Bavarian OEM also licensed the 2.0-L I4 gasoline engine (right) which will be used in the first two VinFast models in both front- and all-wheel drive configurations. To hold down costs, the Vietnamese company simplified the engine design, eliminating BMW’s complex variable-valve actuation. Regardless, Fisher insists preliminary emissions and fuel economy testing is showing numbers that are close to what BMW’s version achieves.
Both VinFast models will target the higher end of the local market, which means cars like the imported Toyota Camry. With average Vietnamese wages barely $2,000 annually, that’s still a stretch, though incomes in cities like Hanoi run significantly higher and are growing fast.
Even so, the company’s mobility aspirations lead to pause. According to De Luca, the Haiphong plant is being tooled to produce 250,000 cars annually on a six-day schedule running 38 vehicles an hour, with room to grow—but that’s over 80% of Vietnam’s current yearly demand.
“Certainly, the ambition is there,” said Michael Dunne, a leading analyst of the Asian auto market. With a population of around 90 million – more than South Korea – the domestic market could, indeed grow substantially.  But taking on the established order will be tough. “And if I were VinFast,” Dunne opined, “I would be looking at both domestic and import markets.”
For his part, De Luca acknowledges he is studying opportunities in other parts of Southeast Asia, and Europe. Perhaps even the U.S. could eventually be considered.
There are, of course, plenty of other Asian automotive wannabes. More than a few, like Indonesia’s Proton and India’s Tata, have discovered just how difficult it can be to crack through the established order. But if VinFast fails, it won’t be for lack of trying—or, more specifically, trying to speed up what much of the rest of the global auto industry is doing. Continue reading »