Vietnam’s VinFast taps Magna Steyr, other suppliers to become a global player







VinFast’s first SUV is the same size as a BMW X5 but has 7 seats. It will offer a choice of rear-wheel or all-wheel drive and be equipped with a 2.0-litre turbo gasoline engine mated to an 8-speed automatic transmission.

Vietnam’s first domestic automaker is leveraging Italian design along with German and Austrian engineering and manufacturing expertise, including Magna International subsidiary Magna Steyr, for its first two production vehicles.

After an extremely short time to market, VinFast debuts a Pininfarina-designed SUV and sedan this week at the Paris auto show. These vehicles will arrive roughly 16 months after the company decided to enter the auto business in June 2017. VinFast — part of Vietnam’s largest conglomerate, Vingroup — is investing more than $3.5 billion to start its automotive operations. This includes a just-completed 500,000-unit greenfield manufacturing complex and an initial lineup of four products.

“For doing in 24 months what others require 36 to 60 months, we needed to partner with the best,” VinFast CEO Jim DeLuca said. The U.S. executive — who was summoned “from a comfortable retirement” after a 37-year career at General Motors that he ended as global head of manufacturing — was hired by VinFast in September 2017. His task: Create an automaker from scratch with plenty of money but not much time.

VinFast’s midsized sedan and SUV are based on BMW technology and thus have similar proportions to the 5 series and X5, respectively. Powering both is a four-cylinder, 2.0-litre turbo gasoline engine licensed by BMW and adapted to VinFast’s needs by Austrian engine specialist AVL. Germany’s ZF Friedrichshafen is supplying an eight-speed automatic transmission.

Another Austrian supplier, Magna Steyr, was responsible for the engineering and development of VinFast’s first two models, which are set to go into production in September 2019.

More than 400 engineers from Magna Steyr are developing a new platform for each of VinFast’s inaugural models.

At full capacity, combined production of the vehicles is expected to reach 250,000 units a year. By 2025, VinFast forecasts output of half a million vehicles a year.

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VinFast will initially concentrate sales in nearby markets in the Association of Southeast Asian Nations (ASEAN). Exports to Europe and the United States are expected later, the company said without being more specific.

German technology is pervasive in the company’s new $1.5 billion, 1.6 million-square-foot plant in Dinh Vu near Hai Phong, a major port city in northern Vietnam that is 50 miles from the capital of Hanoi. Schuler supplied most of the press shop, while Durr supplied the paint shop and Eisenmann and EBZ the assembly shop. The engine shop relies on FFG and Grob-Werke technology, while Switzerland’s ABB supplied about 1,200 robots for the body shop.

The plant initially will employ 5,000 people. The factory will have three shifts daily and operate 306 days a year. A workweek in Vietnam is 48 hours over six days. A line worker earns the equivalent of $500 to $800 a month, VinFast said.

VinFast’s $1.5 billion greenfield plant will have the capacity to build 500,000 vehicles a year on 3 shifts operating 306 days a year.

The midsize sedan and SUV represent the first phase of VinFast’s entry into automaking — with a top-down approach that calls for beginning with premium products, followed by more mainstream models. VinFast is working on a rebadge of the Opel Karl minicar, starting from the underpinnings of its stablemate built by GM in Vietnam, the Chevrolet Spark.

In June, VinFast signed a deal with GM to take over the U.S. automaker’s Hanoi factory along with its dealer network and employees. Italdesign tweaked the design to make the Karl appear to be part of the VinFast brand image. The Volkswagen Group-owned design and engineering firm also crafted a new, full-electric minicar, due probably in 2020. German engineering specialist Edag is developing this electric car, which sources says has a minicar footprint but, thanks to shorter overhangs that result from not having a combustion engine, offers the interior space of a small car.

CHEMISTRY WITH BMW

Vingroup Chairman Pham Nhat Vuong is one of the country’s three rising businessmen, with an estimated net worth of more than $1 billion. Vuong was a geology student in Moscow when the Soviet Union was disintegrating. Spotting opportunities in a market hungry for fast food, in 1993 he moved to Kharkiv in newly independent Ukraine. There he quickly established the country’s top instant-noodle brand.

In 2009, Vuong sold this business for $140 million to Nestle, the multinational food giant, and moved back to Vietnam to found Vingroup. Today it is that country’s biggest conglomerate, with a market capitalization of more than $35 billion, encompassing the holding company and two subsidiaries. Vingroup is active in six sectors: real estate, retail, hospitality, health care, education and agriculture. In June 2017, Vingroup decided to enter the car business. Pham called Vingroup Vice Chairwoman Le Thi Thu Thuy and told her to create Vietnam’s first automaker.

“In September 2017, I started really to travel the world to talk to everyone in the car and supply business,” Thuy told Automotive News Europe at an event held in Vietnam in August. “They thought we were crazy, but then they began to believe in our plans. We have had great chemistry with BMW since the very beginning, as well as very good interactions with GM.” Since the creation of VinFast, she has added the chairwoman title.

“There’s a saying that every proper country needs five things: a flag, a national anthem, an army, an airline and a car company,” said Robin Zhu, a senior analyst for Asian autos at Sanford C. Bernstein. With the creation of VinFast, Vietnam now has that car company.