General Motors (GM) has announced that it will transfer its Vietnamese operations to VinFast Trading and Production, a unit of Vietnam’s biggest private conglomerate, Vingroup JSC. VinFast has also been appointed as the exclusive distributor of Chevrolet cars in Vietnam, and the move could help drive up sales in the country, according to Reuters.

Beginning 2019, VinFast will produce small cars at its plant in Hanoi under the GM license. The plant was previously used for assembling Chevrolet parts imported from South Korea, but will soon be optimised for producing VinFast cars, whereas Chevy cars will be imported. The deal will also include GM’s dealer network and employee base, although the transfer is expected to be conducted by end-2018, the companies said in a joint statement. The value of the deal between GM and Vingroup remains unknown.

GM International boss Barry Eagle said “the GM-VinFast strategic partnership will best position the Chevrolet brand and dealer network for long-term growth in Vietnam by leveraging GM’s global scale and expertise, married with VinFast’s domestic strength and insight.”

With this agreement, GM’s Hanoi plant will become VinFast’s second car factory since it was established in 2017. VinFast is currently building a factory complex in Hai Phong at a cost of US$3.5 billion (RM14.1 billion).

On the business end, the move could prove to be profitable for Vingroup, seeing as there is an increase in car ownership and demand, as well as the recent tax cut for cars imported from ASEAN countries. VinFast hopes to be the top car manufacturer in ASEAN, making 500,000 cars per annum by year 2025. Among its planned vehicles include a sedan and SUV, with Italian design house Pininfarina being responsible for both of them.

Expect the first model to debut by September 2019, although VinFast is looking to launch a small car, an electric car and electric bus by end-2019 – there are also plans for pure electric motorcycles. “Our vision is to build an automobile manufacturing eco-system that will include assembly plants, local automotive suppliers and dealers, and a string of supporting industries,” said VinFast CEO, Jim DeLuca.