Lifan halts Vietnam investment plan

Shanghai, June 11 (Gasgoo.com) Chinese auto group Lifan will suspend its plan to invest in a new plant in Vietnam due to economic uncertainties in the country, an unnamed company official told Shanghai Securities Journal yesterday.

Lifan was initially planning to spend $50 million in its manufacture ring plant in Vietnam, to make 50,000 sedans annually by 2011. The company may also export vehicles to other ASEAN countries from Vietnam, the report said.

"But now we have to reconsider our strategies in this region," said the official.

Driven by high global energy and food prices, Vietnam's inflation has hit 25 percent year-on-year in May. In the automobile industry the tax on imported new cars was increased twice in the month – from 60 percent to 70 percent and then to 83 percent.

Other car importers in Vietnam, including the official distributors of Porsche, Kia and BMW, are also watching out for any new move from the government that will further drive up the prices of imported cars.