VIETNAM’S sole automotive manufacturer has become the biggest single employer of former Holden, Toyota and Ford engineers after opening an office in Melbourne and announcing research and development plans for electric vehicles.

VinFast, a three-year-old division of privately-owned Vingroup, which is based in Hanoi, now has 100 engineers and automotive specialists working out of its first overseas branch.

It has outlined plans to start producing EV cars and SUVs and has said the US would be its main target market.

The company manufactures and sells in Vietnam two vehicles; the Lux A2.0 sedan (based on the BMW 5 Series) and the Lux SA2.0 SUV (based on the BMW X5).

It has one motorcycle model; the electric Klara scooter.

In mid-2018, Vingroup’s car arm purchased the assets of GM Vietnam which operated the GM factory in Hanoi that assembled Daewoo-based models from South Korea from 2005 until the plant was sold in 2018.

The deal included the factory, dealer network, employees and the rights to distribute Chevrolet vehicles.

However, there are no plans to market the company’s left-hand drive sedan and SUV in Australia with the Melbourne connection being purely for R&D and potential centre for sourcing Australian components.

“VinFast Australia aims to research and develop new car models and lay the foundation for VinFast’s international expansion, towards realising the vision of becoming a global automobile brand in the future,” a spokesman told GoAutoNews Premium.

“Our goals are to expand our presence to international markets, connect with leading suppliers, catch up with the latest technologies and trends.”

In a statement, VinFast said the research and development of new car models, including both internal-combustion engine (ICE) and battery electric vehicles (BEV), “is currently considered the focus of its Australian operations”.

It said the reason it chose Melbourne as its first offshore satellite was because it has been “the ‘headquarters’ of giant car manufacturers such as Toyota, Ford, Mitsubishi and GM.”

“Melbourne has available facilities, complete supply chains and experienced human resources with profound expertise and knowledge of the auto industry,” it said.

“Not only possessing new proving grounds and a large wind tunnel already available for aerodynamic testing of automakers, Melbourne also has a seaport – the gateway to export cars around the world.

“VinFast Australia is expected to make significant contributions to the development of Vietnam’s automobile brand in the coming future,” the company said.

VinFast is the newest division of hotel and shopping centre developer Vingroup, a private company owned by Vietnam’s richest man, Pham Nhat Vuong.

In an interview with Automotive News, Mr Vuong said he planned to invest up to $A2.9 billion of his own money to fund moves into the US car market.

“Our ultimate goal is to create an international brand,” he said in the interview in December 2019.

“It will be a very difficult road and we will have to put in a lot of effort. But there’s only one road ahead.”

Mr Vuong, whose net worth is $A13.2 billion from real estate and property development, owns 49 percent of VinFast, while the parent, Vingroup, holds 51 percent. In turn, he holds 26 per cent of Vingroup and Vietnam Investment Group (of which he has a 92 per cent stake) owns 31.6 per cent.

He said VinFast won’t make a profit for as much as five years because the Vietnam market was too small, making exports the key to becoming profitable.

VinFast is putting its attention to EVs and expects to begin production later this year. Exports for these are planned for the US, Europe and Russia in 2021.

Automotive consultancy ZoZo Go LLC’s CEO, Michael Dunne, told Automotive News that it “would be some time” before VinFast was ready to compete in the US.

He said it would need to make at least 100,000 vehicles a year to be cost competitive, develop a global brand and establish a parts-and-services network.

However, Mr Dunne said VinFast has an opportunity to enter smaller South-east Asian markets.

VinFast operates a factory in the northern port city of Haiphong and Mr Dunne believes its current models are priced at below cost.

Mr Vuong has said that losses are estimated at $A1.13 billion a year and the company needs about $A435 million each year to absorb the hit of selling cars below cost.

The Lux A2.0 sedan is $A69,000 and its SUV sibling, the Lux SA2.0, is $A88,000. In total, , it is targeting production of as many as 500,000 vehicles – including scooters – a year by 2025.

“We have the desire to build a Vietnamese brand that has a world-class reputation,” Mr Vuong said.

“Our biggest challenge is that Vietnamese products do not have an international brand. To many international friends, Vietnam is still a poor, backward country.

“We will have to find a way to market and prove our products represent a dynamic and developing Vietnam that has reached the highest standards of the world.”

Footnote: in 2019, VinFast started production of the BMW 5 Series-based Lux A2.0 and X5-based Lux SA2.0 using the platforms of the F10 sedan from 2010 to 2017 and of the F15 X5, made from 2013 until 2018.

They both use BMW ’s 2.0-litre four-cylinder petrol engine with ZF eight-speed automatic transmission and rear-wheel drive, but have bodies designed by Pininfarina.

By Neil Dowling