The joint venture between Vinfast and its Thai partner to manufacture Body in White shows the corporation’s commitment to increase the localisation rate of its products.
On June 11, Vinfast signed a Memorandum of Understanding (MoU) to set up a joint venture with Aapico Hitech Plc., one of Thailand’s leading auto parts manufacturers with a market cap of $400 million, to set up a press shop and assembly operations in Vinfast’s Supplier Park in Haiphong.
The purpose of the joint venture is to supply BIW (Body in White) parts for the first two models of Vinfast vehicles—a Sedan and a SUV—to be produced by the third quarter of 2019.
Covering an area of 9.1 hectares in Vinfast’s Supplier Park, the project has the total investment of $60 million, with 51 per cent holding of Aapico and 49 per cent of Vinfast.
“We invest in a joint venture to cooperate with Aapico Hitech in the first project in manufacturing automotive parts and accessories in Vietnam. With this partnership, we believe that there will be more domestic and foreign companies joining the Vietnamese automotive supplier industry. This is an important step in creating a synchronous ecosystem for the Vietnamese automobile manufacturing industry,” said Nguyen Viet Quang, vice president cum CEO of Vingroup.
While Vinfast will provide the premises, invest $20 million to build the plant, and create the best possible conditions for the factory operation, Aapico will be responsible for the overall management of the project, including technology and know-how, plant layout design, and equipment sizing.
In addition, Aapico will also produce and provide all the jigs and dies for Vinfast vehicles, which will have a total estimated value of $85 million. Vinfast, in turn, would then supply jigs and dies to the joint venture company to produce the BIW parts for Vinfast vehicles.
This joint venture is the largest project ever undertaken by Aapico and would also be the group’s second largest overseas investment after investing $100 million into Sakthi Automotive Group to acquire 25.1 per cent of its global operations in June 2017. Aapico presently has manufacturing operations globally, including India, Europe, the US, Mexico, China, and now Vietnam.
“This project has provided a truly significant stepping stone for Aapico to enter Vietnam, and we are confident that this is only the first step to greater things in the future for both of our companies,” said Yeap Swee Chuan, president cum CEO of Aapico Hitech Plc.
Vinfast is a subsidiary of Vingroup, one of the largest and most dynamic business conglomerates in Vietnam with a market cap of over VND327 trillion (over $ 14 billion). In 2017, Vingroup recorded a revenue of approximately VND90 trillion ($3.9 billion).
While it launched the Vinfast Automotive Manufacturing Project on September 2, 2017 in Haiphong, with the goal of building a world-class Vietnamese car brand, Vinfast Supplier Park is intended to increase the localisation rate of products as well as create a sustainable automobile manufacturing eco-system.