Truong Hai face Hyundai Motor withdrawal

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The proposal was sent to the  largest Vietnamese car-maker Truong Hai and Quang Nam People’s Committee, where the Chu Lai-Truong Hai engine manufacturing project is situated, early this month.

“After negotiations, representatives of Hyundai said the effective time of the technology transfer contract had expired and the delay of this project would affect their production and sales plans for the ASEAN market. Representatives from Hyundai had proposed to end the contract and informed that they would ask their leaders to consider adjusting the technology transfer  plans for 2016,” Quang Nam People’s Committee noted in a report.

The decision appears to underline Hyundai’s opposition to continued co-operation based on Truong Hai persisting in its manufacture of low-standard Euro 2 and 3 engines. 

This came just a month after Truong Hai obtained the government’s permission to extend the timeline for the manufacture of Euro 2 and Euro 3-standard engines, as it failed to keep pace with its own roadmap for higher-environmental friendly Euro 4 engines.

In an announcement sent to the company in late November, Deputy Prime Minister Hoang Trung Hai stated the prime minister had agreed in-principle to allow the Chu Lai-Truong Hai engine manufacturing factory to manufacture and sell 100,000 diesel automotive engines by the end of 2018. But if Hyundai ends the contract, Truong Hai will lack the vital technology to complete the contract.

Chu Lai-Truong Hai was the first automotive engine manufacturing project in Vietnam. The project, situated in Chu Lai Economic Zone, Quang Nam province cost some $182 million.

According to Truong Hai, it signed a technology transfer contract with South Korea’s Hyundai Motor Company to produce about 20,000 Euro 2 and 3 emission standard engines a year.

Construction of the factory began in 2011, but it has been delayed while the local car-maker waited for permission from the government to extend the deadline for the sale of Euro 2 and 3 type engines and has still yet to be finished.