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China’s Lifan group has been cooperating with the Vietnam Motor Corporation (VMC) to assemble Lifan cars in Vietnam.

The first domestically-assembled Lifan cars will be launched onto the market in February 2007, according to Nguyen Van Binh, Director of Bao Tan Company Ltd.

The first batch of 10 cars is being assembled and verified at the VMC workshop in Thanh Xuan District in Hanoi. The products are expected to be marketed soon – in early February. The Chinese car is expected to be advantageous in Vietnam’s market in terms of price with the current import tax rates of 25-30% on sets of car parts, and the tax rate of 80% on imported brand new cars.

According to Mr Binh, the model which is being assembled in Vietnam is the Lifan 502, which was introduced at the Vietnam automobile exhibition in June 2006. There are two kinds of engines, 1.3L and 1.6L, with different options to meet different tastes of customers. The approximate selling prices of the cars will be $15,000/unit (including VAT) for the 1.6L and $12,000 for the 1.3L.

Bao Tan Company will be the distributor of Lifan cars nationwide. The main customers that Lifan cars target are those with medium incomes, taxi firms, small travel firms and car leasing companies.

Meanwhile, analysts have said that the manufacturer’s suggested retail prices (MSRP) mentioned above are still high, and thus it would be difficult for the car to compete with the Gentra of GM Daewoo in Vietnam. The Gentra has a 1.5L engine and an MSRP at $18,400/unit for Modern S and $18,900 for Modern SX. However, in fact, customers can buy Gentras for $16,000/unit.

Sources said that a set of Lifan 502 car parts in China is just $4,000/set; therefore, the MSRP proves to be quite high. In the second half of 2006, several consignments of Lifan 502s were imported for sale in HCM City and Hanoi. An imported Lifan 502 1.6L was sold for $16,000, but sales were very slow, with only some 20 units sold, though the distributor launched big advertisement campaigns.
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