Vietnam's diversified property group Vingroup plans to enter the automotive business by building its own car plant near Hanoi.

According to reports in the region, the company has begun construction of a US$1.0-1.5bn green field plant with a planned initial capacity of 100,000-200,000 vehicles per year.

Longer term, the company is targeting annual production of around 500,000 vehicles, to be achieved by 2025, which would make it one of south east Asia's leading vehicle manufacturers. 

Vingroup, which has successfully diversified into the retail and healthcare sectors, has been encouraged by the rapid growth in the country's vehicle market in the last few years. 

Sales of passenger cars and commercial vehicles in the country have more than tripled from 81,000 units in 2012 to 271,000 units last year, according to the Vietnam Automobile Manufacturers Association, while motorcycle sales reached 3.1m units annually.

VinGroup said it wants to make passenger cars, seven seat SUVs and electric motorcycles at the new plant. It plans to produce the first electric motorcycles within a year and the first passenger cars within two years.

The company's construction division, VinFast, is said to have signed a memorandum of understanding with Credit Suisse bank to borrow US$800m to build the factory near the port city of Haiphong.

VinFast said it plans to appoint a leading international automotive executive to head up the new automotive company and will use the services of leading Italian vehicle designers and buy engine and mechanical blueprints from leading European and US designers.