Honda Vietnam has begun automobile operations with the launch of the Civic, produced at its new plant in the suburbs of Hanoi in Vinh Phuc Province.

HVN will hold the opening ceremony for the new plant on 25 August.

The new assembly plant has an annual production capacity of 10,000 units. In addition to welding, painting and trim/mechanical assembly, the plant will also assemble engines, a claimed first for an automobile plant in Vietnam.

By 2010, investment is expected to reach approximately $US60m, including the plant and a new sales network.

The automobile operation is expected to directly employ about 250 at the plant and over 700 counting in the dealers and parts suppliers.

HVN has begun car sales with the Civic four-door sedan, available with i-VTEC 1.8- or two-litre engines. The Civic is priced from 495 to 605m Vietnamese Dong (VND) ($US31,548-$38,558) and HVN plans monthly sales of about 300 units. Just-auto understands annual income in Vietnam averages $500 a year.

Honda car sales will begin at four dealers that have been established in the largest cities (two in Hanoi and two in Ho Chi Minh City) with plans to expand as demand grows. Each dealer has a spacious showroom and service operation.

Honda is no stranger to Vietnam. It began motorcycle production there in December 1997. Annual sales reached 617,000 units in 2005, a 20% increase from the previous year.

Although the car market in Vietnam is still in its infancy with about 35,000 units sold in 2005 according to VAMA (Vietnam Automobile Manufacturers Association), HVN has constructed the new car assembly plant with permission from the government with a vision for market growth in line with the expected growth of the country's economy, Honda said in a statement.

That same government, however, has enraged other, earlier established car makers with constant changes to its punitive taxes on vehicles and parts.

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