Key Takeaways
- VinFast has suspended plans to manufacture three electric vehicles in India.
- The manufacturer has asked suppliers to halt work on the VF3, VF6, and VF7 SUVs.
- VinFast cited cost considerations as the reason for the suspension.
VinFast, the Vietnamese automaker, has suspended plans to manufacture three electric vehicles in India, according to sources and a company memo reviewed by Reuters. The manufacturer has asked suppliers to 'hold all activities' on the VF3, VF6, and VF7 SUVs, which it currently imports as kits from Vietnam and assembles in the country.
This development marks a significant setback for VinFast, which had hoped to build a regional manufacturing base serving South Asia, the Middle East, and Africa. The company had previously pledged to invest $2 billion in its first factory outside Vietnam, located in southern India.
VinFast did not directly address whether it suspended local manufacturing plans for the three models. However, it stated that it has not changed or suspended plans for the VF6 and VF7 models currently on sale in India and will continue to assemble them at its factory.
The suspension of plans to locally manufacture the VF3, VF6, and VF7 in India has not been previously reported. According to sources familiar with the matter, VinFast has not met its planned costs for developing parts in India for these cars, leading to the decision to halt the work.
In a July memo to suppliers, VinFast said it decided to 'temporarily' put on hold all development work related to the VF3, VF6, and VF7. The memo also asked suppliers to provide a detailed breakdown of the 'total amount invested to date' on the projects that require payment or reimbursement from VinFast.
VinFast’s struggle to break into India’s third-largest car market echoes challenges faced by other international automakers, such as Volkswagen and Nissan, which did not achieve the scale that has helped companies like Suzuki and Hyundai succeed.
A company representative told Reuters that India remains an important market in VinFast’s long-term business and manufacturing strategy. Based on market research and consumer feedback, the company is making 'appropriate adjustments' to its products to 'better meet the needs of Indian customers'.
While VinFast has publicly stated its intention to increase local sourcing from India, including through partnerships with domestic suppliers, plans to manufacture the VF3, VF6, and VF7 in the country have not been previously disclosed.
