VinFast eyes Ford Chennai factory as part of its India entry plans

Industry sources say the VinFast has made the initial enquiry for Ford's Chennai factory and the talks may be at a preliminary stage.

Vietnamese electric vehicle (EV) manufacturer VinFast is actively exploring options for establishing a manufacturing base in India as part of its global expansion strategy. One of the potential options being considered is the Ford India factory located in Chennai, the Autocar India reported on October 9.

Moneycontrol could not verify the report independently.

More importantly, the move aligns with VinFast's efforts to expand its operations and presence in the EV market, leveraging existing facilities to enhance production capabilities and cater to the Indian market's growing demand for EVs.

The potential acquisition of Ford India's factory in Chennai is one of the greenfield alternatives being examined by Vinfast in India.

Sources told the automobile magazine that VinFast's strategy, likely following a top-down approach, may start its operations in India with completely built import units and knocked-down kits before gradually transitioning to local manufacturing in the latter part of this decade.

"We continue to explore alternatives for the Chennai plant and have nothing further to add," a spokesperson at Ford told the publication.

The Ford India plant located in Chengalpattu, near Chennai, Tamil Nadu, has a substantial manufacturing capacity of 210,000 units. However, considering the evolving landscape of EV volumes in India, VinFast is expected to initially opt for a lesser manufacturing capacity that aligns with the current stage of EV adoption and demand in the country, according to the report.

However, the acquisition of the Ford factory is likely to come at a much lesser price than a greenfield facility.

In January this year, Ford's modern plant in Sanand, Gujarat, was sold to Tata Motors for around Rs 725 crore (less than $100 million).

People familiar with matter told Autocar India that more than 25-year-old factory located in Chengalpattu may be valued at a significantly lower price, especially considering the settlement with the workers has already been executed.

"The company (VinFast) is exploring a minimum of a 100,000-unit facility in the country and has already explored multiple alternatives in Gujarat and Tamil Nadu. The plan is to go top down – but eventually products manufactured in India are likely to be in the core B segment where the majority of volumes may come from in the future, " sources told the magazine.

VinFast, which has enjoyed huge success in its home market of Vietnam, launched its cars in the US and also Europe last year, selling cars in France, Germany and the Netherlands.

(Update: The earlier version of this story did not mention the source. The omission has being rectified.)