Last week Vinfast, a subsidiary of Vinagroup, began manufacturing the Vinfast line of automobiles. The line begins with a standard hatchback and a sedan, two vehicles that are priced around 17,000USD. This is cool.
For a couple of reasons is this cool. First, car purchases in Vietnam are up 22% year on year since 2018. This means that there are more cars reaching the road even though there are still severe import taxes on foreign made vehicles. If Vinfast delivers a quality vehicle, it is possible that this will allow the Vietnamese economy to become more self-sufficient and the cheaper domestic vehicles to dominate the market.
If this happens, then the USD balance of payments would tilt even more in favor of Vietnam as millions of dollars would stay in Vietnam rather than being transferred overseas as a result of car purchases from Tokyo or Detroit.
This is also cool because it means that Vietnam has developed the infrastructure and logistics supply chains for manufacturing vehicles. While this isn’t news, it is important to understand that supply chains are vital to the increasing manufacturing capabilities of the country, especially in light of the trade war between China and the USA.
That Vinfast can produce a competitive vehicle in the market is a sign that the Vietnamese manufacturing community is coming into its own.
Finally, the fact that Vietnam has decided to manufacture its own cars, something that hasn’t happened since the Cold War, is a good sign that Vietnam is economically recovered from the decades of war that tore the country apart during the last two centuries. Vietnam isn’t just the name of a war anymore, its a living, vital, and exciting place for investment and growth.