THACO will assemble two multi-purpose vehicles (MPV) under the Peugeot Traveller brand, with parts imported from France, CEO Pham Van Tai said Sunday at the inauguration of the plant.

The VND4.5 trillion ($194.3 million) factory, spanning an area of 7.5 hectares, has a capacity of 20,000 cars a year. 

MPVs are becoming popular in Vietnam for their large interior space, suitable for both family and business use, industry insiders say. Last year, MPV sales rose 24.5 percent over 2017 to over 20,300 units, according to the Vietnam Automobile Manufacturers Association.

THACO is a major assembler of foreign brand vehicles including Peugeot, Kia and Mazda. Its chairman Tran Ba Duong had said in December that the company plans to assemble BMW cars, without giving further details.

The company is the sole authorized distributor of BMW in Vietnam. It currently runs two BMW showrooms in Hanoi and Ho Chi Minh City.

THACO proposed recently that the special consumption tax on car parts produced in the country be removed so as to strengthen the local supporting industry and reduce the prices of made-in-Vietnam cars.

Vietnam’s supporting industry for car manufacturing remains weak compared to other countries in the region. There are only 358 such businesses in the auto industry in Vietnam compared to 2,500 in Thailand, according to the Ministry of Industry and Trade. The ministry has also said that Vietnam imports over 90 percent of its auto parts.