VinFast puts the brakes on manufacturing some cars in India, sources and memo say

VinFast Auto

02/09/2026 09:26

Has ordered suppliers to halt work on 3 projects while it reviews costs, sources says
Move is setback for Vietnamese carmaker's India expansion strategy
VinFast faces same challenge of achieving scale that has hindered other automakers
Updates Tuesday story to add latest company comment in paragraph 6
By Aditi Shah
NEW DELHI, Sept 1 (Reuters) - VinFast VFS.O has suspended plans to manufacture three electric vehicles in India and ordered suppliers to halt work on the projects while it reassesses costs, according to two sources and a company memo reviewed by Reuters - a year after the Vietnamese automaker entered a crucial growth market.
The manufacturer has asked suppliers to "hold all activities" on three programmes, including a two-door SUV called VF 3 - expected to be its most competitive model in the market - and the VF 6 and VF 7 SUVs, which it imports as kits from Vietnam and assembles in the country.
     
INDIA EXPANSION SETBACK
The suspension marks another setback for loss-making VinFast, which has turned to India for growth after facing difficulties gaining market share in the U.S. and Europe.
The suspension of plans to locally manufacture the three vehicles in India has not been previously reported.
Vinfast opened its first factory outside Vietnam in southern India last year and pledged to invest $2 billion, as it sought to build a regional manufacturing base serving South Asia, the Middle East and Africa. 
After publication of this story, VinFast told Reuters the change in production strategy relates to future models and it will continue to import and assemble the VF 6 and VF 7 currently being sold in India.
VinFast also said it plans to develop India-specific models, rather than just bringing in existing global models - a move that it says will allow it to accelerate local sourcing.
While VinFast has publicly stated increasing local sourcing from India, including through partnerships with domestic suppliers, plans to manufacture the VF 3, VF 6 and VF 7 in the country have not previously been disclosed and were described to Reuters by people familiar with the matter.
"India is an important market in VinFast's long-term business and manufacturing strategy," a company representative told Reuters in a statement, adding that based on market research and consumer feedback it is making "appropriate adjustments" to its products to "better meet the needs of Indian customers".
VinFast's struggle to break into the world's third-largest car market echoes challenges faced by others, including Volkswagen VOWG.DE and Nissan 7201.T, which did not achieve the kind of scale that has helped companies, such as Suzuki 7269.T and Hyundai 005380.KS, succeed.
In a July memo to suppliers, the automaker said it decided to "temporarily" put on hold all development work related to the VF 3, VF 6 and VF 7. Locally developing and sourcing parts would have allowed VinFast to avoid expensive imports and price its cars more competitively.
     
SUPPLIER INVESTMENTS  
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 across cost categories such as tooling, engineering and materials, along with "supporting documentation where available".
VinFast did not meet its planned costs for developing parts in India for the three cars, which is why it stopped the work, one of the sources said.
Both sources declined to be named as they are not authorised to speak to the media.
Backed by Vietnam's largest conglomerate Vingroup VIC.HM, VinFast launched in India in September 2025 with its VF 6 and VF 7 electric SUVs. Its India factory has an initial annual production capacity of 50,000 cars and is scalable to 150,000 units.
The automaker has so far sold about 10,000 cars in India, including to its affiliate ride-hailing company Green SM.
     

 (Reporting by Aditi Shah; Additional reporting by Phuong Nguyen in Hanoi; Editing by Soyoung Kim and Jacqueline Wong)
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