VinFast, the Vietnamese electric vehicle (EV) manufacturer, has taken the automotive industry by storm following its recent debut on the Nasdaq exchange. However, a notable shift in the company’s distribution strategy for the U.S. market has left industry players in a state of intrigue mingled with wariness. Despite having already shipped nearly 3,000 vehicles to North America in the latter part of the previous year, VinFast has announced its intention to pivot away from its Tesla-inspired direct-to-consumer sales approach and embrace a model that includes dealership sales.
While some U.S. automotive dealerships are embracing the idea of forging a partnership with VinFast, many others are treading cautiously, eager to learn more about the fine details of the company’s plans. Of particular concern to dealers are the intricate aspects of VinFast’s sales strategy, the prerequisites for dealerships, the blueprint for parts distribution, and the extent of coverage offered under the vehicle warranty.
Le Thi Thu Thuy, VinFast’s CEO, has outlined the reasoning behind this strategic shift, underlining the acceleration it can provide to the company’s market penetration. She pointed out that while establishing stand-alone retail outlets can be advantageous, the synergy with dealerships can expedite this process. VinFast’s global footprint boasts 122 showrooms, with a significant concentration in the U.S. West region.
However, dealers have voiced a host of apprehensions about the new approach. Their concerns span issues like the availability of spare parts for potential repairs, the impact on their reputation as dealerships, and the level of risk involved in aligning with a relatively new entrant in the competitive EV market.
VinFast’s path into the U.S. automotive landscape is not without its formidable challenges. The company faces stiff competition from established automotive giants such as General Motors (GM), Ford, and Hyundai, which have already entrenched themselves in the electric vehicle segment. Moreover, industry veteran Warren Browne has expressed skepticism about VinFast’s chosen strategy, suggesting it could potentially expose the company to undue risk and scrutiny from Wall Street, while extracting value from its operations.
Amid the skepticism, there is a contingent of optimists. The dynamic landscape of automotive dealerships, well-accustomed to taking calculated risks, is entertaining the unique prospect VinFast presents. The lack of an established brand name doesn’t seem to be a deterrent for these dealers, who point to the successes of brands like Toyota, Honda, and Hyundai that started small and grew over time.
Beau Boeckmann, president of Galpin Motors, a significant dealership player in the bustling Los Angeles region, remains receptive to the idea of collaboration. Boeckmann emphasizes the entrepreneurial spirit ingrained in dealerships, suggesting that this characteristic, combined with VinFast’s innovative approach and adaptability, could contribute to a fruitful partnership.
VinFast’s strategic realignment towards dealer partnerships marks a departure from its direct-to-consumer model. While skepticism abounds, the company’s unique approach, coupled with enticing incentives for dealers and comprehensive warranty coverage, may potentially lay the groundwork for a successful foray into the fiercely competitive U.S. electric vehicle market.