Hanoï (AFP) – Introduction on the New York Stock Exchange, showroom in Paris… Vietnamese automaker VinFast dreams of becoming a global leader in electric cars but struggles to attract local customers.
Launched in 2017, VinFast is still searching for a place in a rapidly expanding market, despite the strength of its parent conglomerate, VinGroup, the largest in the country.
According to data from the International Organization of Motor Vehicle Manufacturers (OICA), Vietnam recorded approximately 280,000 new registrations in 2022.
Only 7,400 of these were for the VinFast brand, representing less than 3%. This is a drop in the bucket for Vietnam, a country with 100 million inhabitants, whose sustained growth provides opportunities for businesses.
The automaker saw growth in 2023, with 11,000 vehicles sold from January to June… but its main customer, who purchased half of them, is a taxi company owned by VinGroup.
Since the beginning of the year, the brand has sold 21,000 units worldwide, far from its goal of 50,000 for the entire year.
Those who have made the switch complain about the lack of reliability of certain models: construction defects, software bugs… This is bad publicity for the brand, which is already challenged by the underdeveloped network of charging stations.
VinFast assured in a statement that after “several software updates and improvements, (its) vehicles are functioning well.”
“I don’t want to spend my money on an imperfect product,” said Ngo Trong Tu, a 31-year-old businessman from Hanoi, who preferred to spend an extra $5,000 on a Japanese gasoline car rather than a VinFast.
– Stock Plummet –
“You can’t expect a perfect product right after its launch,” tempered VinFast’s executive director, Le Thi Thu Thuy, in an interview with AFP.
“There are high hopes and expectations for us to do better,” she assured.
VinFast is the international flagship of VinGroup, owned by Vietnam’s richest man, Pham Nhat Vuong, whose fortune is estimated at $5 billion by Forbes.
The businessman spotted the potential of the electric vehicle market in the context of the energy transition that encourages the abandonment of internal combustion engines.
Despite the expansion of sales outlets in Europe and the United States, and development projects in India, Indonesia, and the Middle East, the venture is currently in the red. VinFast announced losses of $623 million in the third quarter of 2023.
The doubts surrounding the brand have had an impact on its stock performance on Wall Street, which, since its introduction on the Nasdaq in August last year, has experienced a rollercoaster ride.
The stock is now trading around $7, far from the record reached at $82 at the end of August. VinFast’s market valuation was then higher than that of giants Ford and General Motors.
“For now, these losses can be sustained because VinGroup has deep pockets, but it cannot last forever,” says James Guild, a specialist in Southeast Asian trade based in Singapore.
– “Need Time” –
“The company seems to be producing more cars than the market can absorb,” he added. “It needs a viable financial and operational plan for the coming years, and for now, it is difficult to see what that is.”
VinGroup was a pioneer in electric vehicle infrastructure in Vietnam: the conglomerate launched buses, taxis, electric scooters, and charging stations in recent years.
But an anonymous Vietnamese automotive expert, fearing retaliation from the powerful group, noted that “VinFast has not gained our trust.”
“Users cannot buy such an expensive car based solely on national pride,” he said.
Tran Lien Phuong, director of the consulting and market research company AMCO in Ho Chi Minh City, observed that even though the communist government encourages consumers to buy Vietnamese products, they tend to trust foreign brands more.
“Competition will certainly be long and difficult for VinGroup. Anyone entering this kind of market needs time,” highlighted Mr. Tran.
©AFP
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