The leading domestic conglomerate in Vietnam, Vingroup , officially opened its new vehicle assembly plant in the northern port city of Haiphong with a ceremony attended by prime minister Nguyen Xuan Phuc and other government officials.

Production of the first home grown Vietnamese vehicle, the VinFast Fadil, a small car powered by a 1.4-litre engine, had started earlier this month just two years after production plans were first announced.

Deliveries of the car, priced at VND450m (US$19,400) and designed to take on the Kia Morning, the current segment leader, began today (24 June).

Initial production capacity is 250,000 vehicles a year but this will increase to 500,000 once a US$3.5bn investment plan is complete.

Considering the overall Vietnamese annual vehicle market was less than 300,000 units at its peak a couple of years ago, this is clearly a very ambitious project although it is unclear how much of this capacity will be dedicated to motorcycle production for which there is substantial domestic demand. 

The Fadil is the first in a series of new locally developed vehicle models scheduled to be produced in the plant.

Two Pininfarina-designed models are set to go into production in July, the Lux A2.0 sedan and Lux SA2.0 SUV.

The latter was unveiled at the Paris Motor show in 2018.

A new electric motorcycle is set to follow by the end of the year, according to reports citing company officials, as part of a 12-strong passenger vehicle and electric motorcycle model offensive to reach the market by the end of 2020. 

VinFast is banking on broader regional appeal for its vehicles, particularly within neighbouring south east Asian markets where they will have tariff free access.

Vinfast recruited former General Motors executive Jim DeLuca to run the company, Magna Steyr of Austria, to help with vehicle development and production, and domestic and overseas suppliers including Bosch to manufacture key components near the assembly plant.