Vietnamese electric car manufacturer has caused a stir this week by publicly announcing recent changes in their sales approach in the United States, leaving dealers cautious yet intrigued.
Since late last year, the automaker has produced nearly 3,000 cars in North America. They had been using a direct sales model, but the company revealed on Tuesday that they are shifting their sales approach and hope to sell their products through dealerships.
Many American dealerships have shown openness to this development but express a desire to learn more about VinFast’s detailed plans, including their sales strategy, dealership requirements, spare parts distribution plans, and warranty policies.
“Is there room for more brands? Possibly, but it’s too early to say. I need more information to make an informed decision,” explained George Glassman, Chairman of the Glassman Automotive Group, which has sold five well-known car brands in addition to Detroit.
VinFast was listed in the U.S. on Tuesday, and its stock price surged, briefly giving the company a market value of $85 billion, surpassing that of Ford. Since then, VinFast’s stock has adjusted, dropping 33.6% and closing at $20 on Thursday.
As VinFast intensifies its growth efforts, it will face formidable challenges. The new mixed sales strategy is just one more challenge for the company to tackle, and discussions with dealerships have already begun among luxury car manufacturers.
“Running standalone stores is good, but it takes a lot of time,” said VinFast CEO Le Thi Thu Thuy on Tuesday. “Accelerating growth with other partners is always our criteria.”
As of June, VinFast had opened 122 showrooms worldwide, with the majority located in the Western United States. VinFast’s leadership has stated that, in addition to direct sales, the company will collaborate with dealerships to establish new sales points in North America and other global markets.
“We are currently defining the terms of this new model and reaching out to potential partners,” Le Thi Thu Thuy said.
American dealers still have many unanswered questions, including how VinFast will supply necessary auto parts for repairs.
Scott Fink, CEO of the Fink Automotive Group, which owns Volkswagen and Subaru dealerships near Tampa, Florida, remarked, “Dealers have to consider their reputation. If I sell you a car that you can’t get a mud flap for, you’ll be mad at me. I won’t do that.”
“The devil is in the details,” he added.
While Tesla has claimed leadership in the electric car market, other startups are still struggling in the early stages. Additionally, VinFast must compete with well-established electric vehicle manufacturers like General Motors, Ford, and Hyundai.
Andrew DiFeo, a dealership owner in St. Augustine, Florida, south of Jacksonville, said, “The first thing you have to think about is whether you’ll still be alive in five years. That’s a big question.”
Many dealers believe VinFast needs to provide higher profit margins to cope with increasing risks. Furthermore, the company may need to offer industry-leading warranty policies to reassure consumers.
However, industry advisor and former GM CEO Warren Browne expressed disappointment in this strategy.
He commented on the collaboration program among dealerships: “It’s a killer strategy. Service dealers gain too much value. Wall Street will encourage them to do this.”
But Rhett Ricart, CEO of the Ricart Automotive Group in Columbus, Ohio, believes that dealerships are betting enough with VinFast selling at historic lows. Many also appreciate VinFast’s establishment of a U.S. factory.
Dealers also argue that brand perception isn’t the key factor, citing Toyota, Honda, and Hyundai as examples of companies that have grown from small to large with good products and long-term warranties.
“As long as the product is good and has a long warranty, Americans will buy it,” said Rikart.
Galpin Motors, which sells 12 car brands in the Los Angeles area, including the electric car startup Polestar, is always on the lookout for unique opportunities.
Beau Boeckmann, President of Galpin, who visited VinFast’s factory in Vietnam last year and met CEO Thuy, is keeping the door open.
He said, “Selling is what entrepreneurs and risk-takers do. Salespeople like to sell.”