Japan and South Korea have cracked the US auto market. Now a company from Vietnam wants to try
By Peter Valdes-Dapena, CNN Business
Vinfast, a Vietnam-based automaker, on Wednesday unveiled a pair of electric SUVs it plans to start selling in the United States next year.
A subsidiary of the huge Vietnamese conglomerate VinGroup – which owns companies in tech, healthcare, amusement parks and even a university – Vinfast has unveiled its first models, a pair of luxury sedans at gasoline, at the 2018 Paris Motor Show. Both sedans used engineering from German luxury automaker BMW, including its engines. The company now also offers gasoline SUVs in Vietnam with BMW engines, including a high-performance model called the President.
But the company has much bigger ambitions.
“We want to become a global brand,” said Vinfast Global CEO Michael Lohscheller, “and if you want to be a global brand, you have to come to the United States.”
The two electric crossovers unveiled at the Los Angeles Auto Show on Wednesday, the VF e35 and VF e36, were designed by Italian Pininfarina, who has also designed other gasoline-powered cars for VinFast. Pininfarina is best known for its history in designing classic Ferraris. More recently, Vinfast has turned to electric vehicles, such as the small VF e34 crossover offered in Vietnam.
The Vinfast VF e35 has a range of up to 310 miles on a charge, according to Vinfast. The e36 can travel up to 422 miles on one charge. Both have a variety of semi-autonomous driver assistance features similar to those available on other luxury SUVs, such as automatic parking and semi-automatic driving.
In the United States, Vinfast will only sell electric vehicles, Lohscheller said, because this is where the company sees its greatest opportunity for growth. The electric models are based on Vinfast’s own engineering, Lohscheller said.
“The whole market is completely disrupted,” he said, “so we are immediately moving towards electric vehicles only, and with that we believe that the potential of the market is increasing dramatically.”
Vinfast also faces increased competition from companies such as Rivien and Lucid, not to mention Tesla, for potential buyers of electric vehicles. These companies could also pave the way for a newcomer like Vinfast, said Stephanie Brinley, auto industry analyst at IHS Markit. Car buyers, especially those looking at electric cars, are now more used to seeing unfamiliar names.
Lohscheller took over as CEO of Vinfast at the end of July after having been CEO of German Opel, now a subsidiary of Stellantis, for four years. Before that, he was a senior executive at Volkswagen.
Vinfast has hired a number of executives, engineers and designers from around the world and this should help them understand consumers in markets like the United States and Europe, said Stephanie Brinley, industry analyst. automotive at IHS Markit.
“They bring them in full time, not just as consultants,” she said. “I think it will help them when they try to enter this market.”
Corn Vinfast does not currently intend to enter China, another of the world’s largest automotive markets. said Lohscheller.
Vinfast follows other Asian automakers who have entered the highly competitive US market. Hyundai and Kia, two related South Korean brands, entered the US market in 1986 and 1992, respectively, with inexpensive compact cars. Decades ago, Japanese brands like Toyota, Honda, and Subaru debuted in the United States with a similar strategy.
While the vehicles Vinfast is bringing to the United States don’t appear to be low-budget models, the company is, to some extent, following the model of their Asian predecessors, Brinley said. Hyundai and Kia have found success with customers who recognize that they can get, for example, a well-equipped three-row SUV with luxury amenities for a price similar to that of a smaller vehicle from a brand of luxury.
“Our brand position here in the United States is inclusive,” said Nguyen Van Anh, CEO of VinFast US. “We want to provide a high-end product at a reasonable price. “
Vinfast has yet to say exactly how much its new SUVs will cost.
In addition to the two electric SUVs, VInfast also recently unveiled its US headquarters in Los Angeles. For now, the company plans to build these SUVs in Vietnam, but a US plant is slated for the second half of 2024, Lohscheller said.
The company will first start selling its electric SUVs next year in California through 60 company-owned outlets rather than through independent dealers, Nguyen said, because most cars in the States United are currently sold.
“We want to provide exceptional customer service to our customers,” she said. “So we want to control the customer journey from A to Z.”
Bypassing independent franchised car dealerships, which electric car start-ups like Tesla and Rivian are also doing, has led to legal battles in a number of states where an automaker selling direct to consumers is breaking the laws of the State. Vinfast plans to roll out Vinfast showrooms in other US states in the coming years, Nguyen said.
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