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Ford Joins Rush into Vietnam’s Crowded Car Market

February 23, 1995

HANOI, Vietnam (AP) _ Ford Motor Co. joined the rush into Vietnam’s tiny automobile market Thursday by signing a $102 million agreement to assemble cars and trucks here.

The deal, if approved by Vietnamese authorities, would make Ford the first U.S. car maker to invest in the country since the Vietnam War ended 20 years ago. German and Japanese carmakers also are betting that Vietnam’s undeveloped economy can sustain the interest.

Ford would also become the biggest American investor in Vietnam since Washington lifted its 19-year economic embargo last February.

The agreement between Ford and Vietnam’s Song Cong Diesel Co. creates a joint venture to assemble Ford vehicles from imported kits at a plant to be built 35 miles east of Hanoi.

The two companies hope to win approval from the State Committee for Cooperation and Investment to begin work on the facility in April, said the Vietnamese partner’s director Bui Van Liet.

``We have successfully completed a joint feasibility study with Song Cong,″ said Thomas Cook, Ford’s director of international business development, in a press release. ``We are optimistic that the government will approve our application.″

Cook declined to give details after the private signing ceremony when asked to name the models of cars and pick-up trucks to be built at the new venture, called Ford Vietnam Ltd.

The first cars should roll off the assembly line in 1997, Liet said in a separate release. Ford will hold a 75 percent share in the venture, with state-run Song Cong owning the remaining 25 percent.

Industry analysts say Vietnam’s 72 million consumers bought no more than 4,000 new cars and vehicles of all types in 1994. Yet carmakers are eager to enter the market.

Germany’s Bayerische Motoren Werke AG assembled its first sedans from imported kits at a Hanoi factory last month. Japan’s Mitsubishi Corp. started last week to build a minivan plant near Ho Chi Minh City. Suzuki Motor Corp. of Japan plans to break ground for a similar facility in March, while Toyota Motor Corp., the biggest Japanese car maker, wants to invest in an assembly plant of its own.

Some automakers admit the front is looking crowded.

``In this small market, there are many big automakers trying to come, so car production and sales will be crowded,″ said Masahiro Koizumi, vice president of the Mekong Corp., a Japanese-South Korean venture that is one of four firms already licensed to assemble vehicles in Vietnam. ``I’m afraid we’ll have some trouble in selling our cars.″

One of Ford’s biggest U.S. rivals, Chrysler Corp., also has expressed strong interest in assembling cars in Vietnam. Mark Gelinas, a consultant with the Hanoi-based company VATICO, which represents Chrysler in Vietnam, said last October that it planned to build its Jeep Cherokee and at least one pickup truck model at a plant in Dong Ngai province, 25 miles northeast of Ho Chi Minh City.

Chrysler displayed its cars and Jeeps at two Vietnamese trade fairs last year, and it held talks with at least one potential joint venture partner. VATICO would not comment on the company’s current plans.

Along with Chrysler, the next automotive newcomers are likely to include Germany’s Daimler Benz and France’s Renault, which plans to start an assembly project in April.

The United States ranks as Vietnam’s 13th largest source of foreign investment, with licensed projects worth up to $270 million.

Update hourly