VinFast electric vehicles await delivery at an organization store in Los Angeles. (AP)
Vietnamese electric-vehicle maker VinFast, which made a splash this week when its shares debuted on the Nasdaq, has stirred a combination of caution and interest amongst dealers with a recent change in how it’s going to distribute its cars within the U.S. market.
The carmaker, which has shipped nearly 3,000 vehicles to North America since late last yr, said on Tuesday it was changing its distribution model, which has been based on Tesla’s direct-to-consumer approach.
Now it desires to sell through dealers as well.
Several U.S. dealers contacted by Reuters are open to the concept, but said they should hear more details about VinFast’s plans, including sales strategy, requirements for dealers, the corporate’s parts distribution plan and the vehicle warranty.
“Is there room for more brands? Yeah, there probably is. It’s just too early to inform,” said George Glassman, president of Glassman Automotive Group, which sells five automotive brands outside Detroit. “I’d must see more before I could make an intelligent decision.”
VinFast made its U.S. market debut on Tuesday and shares soared, at one point giving the startup a market valuation of $85 billion – far higher than that of Ford or General Motors on the time. Since then, VinFast shares have retreated, and were down around 22% at around $23 a share at midday on Thursday.
As VinFast ramps up efforts, it faces tough tests. The brand new hybrid sales plan is just one other challenge and the posh carmaker is already talking to dealers.
“Opening our own stores is great however it takes a whole lot of time,” CEO Le Thi Thu Thuy told Reuters on Tuesday. “Joining forces with other partners to go faster has all the time been our nature.”
Officials at VinFast, which has opened 122 showrooms globally as of June with most within the U.S. West, didn’t immediately reply to requests for further comment on dealer strategy.
U.S. dealers said there are too many unanswered questions, including how VinFast will distribute parts needed to make repairs.
A fame query
“The dealer needs to be concerned with their (own) fame,” said Scott Fink, CEO of Fink Automotive Group, which owns VW and Subaru stores near Tampa, Florida. “If I sell a automotive to you and you possibly can’t get a fender, you are going to be pissed off at me. I’m not going to do this.”
“The devil’s in the small print,” he added.
While Tesla has established itself as EV market leader, other startups have struggled to get off the bottom, dealers said. On top of that, VinFast will probably be competing with established brands with their very own EVs, including GM, Ford and Hyundai .
“The very first thing you’ve got to take a look at is are you going to be around in five years? That is an enormous concern,” said Andrew DiFeo, dealer principal at Hyundai of St. Augustine, south of Jacksonville, Florida.
Several dealers said VinFast may have to supply sweetened profit margins to dealers to account for the added risk. On top of that, the automaker may have to offer industry-leading warranty coverage on its vehicles to guarantee buyers.
Those possibilities leave industry consultant and former GM executive Warren Browne cold.
“It’s a death strategy,” he said of the plan to make use of dealers. “There is just too much value extracted by serving dealers. That is a method Wall Street will whip them on.”
But with dealerships selling for historic prices, enough dealer owners will make the bet, said Rhett Ricart, CEO of Ricart Automotive Group in Columbus, Ohio, which sells 10 auto brands. Many also appreciate that VinFast is constructing a U.S. plant.
Dealers also said the dearth of a longtime name just isn’t a deal-breaker as Toyota, Honda and Hyundai all began small and grew into successes.
“If it’s a superb product and it’s got an incredible warranty on it, Americans will buy it,” Ricart said.
Ultimately, dealers are all the time searching for unique opportunities, said Beau Boeckmann, president of Galpin Motors, which sells 12 brands within the Los Angeles area including EV startup Polestar.
Boeckmann, who visited VinFast’s plant in Vietnam last yr and met with CEO Thuy, stays open to the chance.
“Dealers are entrepreneurial and so they’re risk-takers,” he said. “Sales people like to be sold.”
This Article First Appeared At www.autoblog.com