Straight out of the blocks, off and running like Usain Bolt, that’s the Vietnamese car company called VinFast, which only started business in 2017. It has covered a lot of ground since then.
VinFast, the carmaker, is owned by Vin Group, founded by Phạm Nhật Vượng who is jointly, Vietnam’s richest man, and Vietnam’s first billionaire, his wife Huong Thu Pham (below) and sundry others.
The company’s first office was established September 2017 in Haiphong, covering 828 acres, costing USD$1.5 billion, and is described as the first phase of investment. Of course, for the setting up of a car manufacturer that’s chicken feed.
However, not only is VinFast moving rapidly to enter the global automotive industry, but it is also playing a smart game with its business partners. It quickly established working relationships with Pininfarina, BMW AG, Siemens and General Motors.
Vinfast will take over GM’s factory (VIDAMCO) in Hanoi and has announced it has signed a joint venture with GM to build a GM-licensed ‘all-new’ small car, to be sold globally under the VinFast name.
VinFast has also reached agreement with GM to be the sole importer and distributor of Chevrolet products in Vietnam.
As I list these steps, I am staggered by its audacity and ambition. Last year VinFast was to be the title sponsor of the Vietnamese F1 Grand Prix, and even without Bernie at the helm, one can imagine how much that cost.
The first car produced was the Vinfast Lux A2.0, designed by Pininfarina and based on the BMW F10 5-Series, and revealed at the 2018 Paris Auto Salon – along with a Crossover, the SA 2.0, based on the BMW F15 X5.
The first export market was Russia for both these vehicles, but it’s clear they are stop gap measures to establish the company’s credentials, because Executive VP Lê Thį Thu Thùy announced recently that the company will quickly move to making EVs, and announced three new small-medium (BEV) crossovers.
Once you lift the lid on the executives filling the key roles, the GM connections become very obvious. The first CEO was GM manufacturing whiz, Jim Delluca; and the Design Director is David Lyon (designer of the original Chevrolet/Holden Cruze).
|VinFast execs Jim Delluca, VP Lê Thį Thu Thùy and David Lyon|
This week VinFast announced it had hired Michael Lohscheller (right), most recently CEO of Adam Opel AG, at the time the company was acquired by Groupe PSA. It’s a wonder the French group didn’t want to hang on to Lohscheller, because he was the first GM-appointed CEO to push Opel into profit!
Looking at the speed Vin Group is moving I was convinced that Vietnam’s Communist government must be contributing, or guaranteeing, the company’s financial future. How wrong could I be.
Vin Group is Vietnam's largest real estate company and deals in a wide range of properties, including houses, shopping malls, hotels, golf courses and hospitals. The company has enhanced its brand cachet by targeting its Vincom shopping malls and Vincom Village residential areas at affluent customers.
One of the few entirely non-state concerns in Vietnam, Vin Group is about 30% owned by its largest shareholder and founder Pham Nhat Vuong. Foreign investors have a combined interest of about 15%. Market capitalization, at approximately $3 billion, is the largest among non-state-run companies and ranks among Vietnam's top five concerns when including state-owned entities.
Vin Group started out as a food-processing company founded by Vuong in Ukraine in 1993. The company was moved to Vietnam in 2000 as Vuong wished to contribute to the development of his home country. In 2013, he became the first Vietnamese to make it into the Forbes rankings of the world's wealthiest people.
In 2013, Vin Group raised some $200 million from U.S. investment fund Warburg Pincus to invest in four areas -- commercial facilities, tourism, hospitals and schools.
The first anyone in Australia heard of VinFast was when Vin Group acquired the former Holden proving ground at Lang Lang in Victoria. When GM closed up its car manufacturing business in Australia, it sold the vast proving ground to VinFast for USD$30 million.
It's obvious that Vin Group has gambled heavily on the future success of its car making enterprise, but according to Reuters VinFast posted a first half loss in 2020 of USD$284 million. However, Reuters also reported on April 30, 2021 that VinFast planned an SPAC-based funding in the USA.
For the financially-uninitiated, an SPAC company is known as a ‘blank cheque company’ where an outside entity (such as VinFast) creates a ‘shell’ company and then acquires a private company, later taking it public. This method avoids the complicated and time-consuming process of going through a conventional IPO.
On the sales front, sales data for the first quarter of 2021 reveals VinFast was the fifth best-selling car brand in Vietnam. It has also shipped more than 150 prototypes to South Africa, Germany and Australia to undergo testing.
In addition to the ex-GM senior executives I have listed, VinFast went on a head-hunting spree in Australia, hiring a number of former Holden, Ford and Toyota engineers and technical specialists, who will be based at Holden’s old Port Melbourne offices and the proving ground at Lang Lang.
Pardon my skepticism, but I’ve been here before, when I worked for Daewoo Automotive Australia. After several trips to Seoul, and meetings with my friend Ing. Dr. Ulrich Bez, who had been hired to introduce four brand new cars, and discussions with GM contacts who had worked with Daewoo’s mercurial Chairman, Kim Woo chong, I became convinced that the vast amounts of money being thrown around may have been coming because KWC was mortgaging Daewoo’s assets more than once!
What started out as an attempt to become a big player in the global automotive world ended in disaster when Daewoo Group went to the wall in November 2000 with losses of USD$78 billion, after just over 30 years in business.
Daewoo Group included Daewoo Motor, shipbuilding, heavy equipment manufacturing, consumer electronics and white goods, plus computers and a railway division!
The Chairman, Kim Woo choong, was sentenced to 10 years in prison for massive fraud, but was pardoned by the South Korean government in 2007.
He, and his Daewoo dreams, died in December 2019.
But, back to Vin Group, and its high performing owner. This enterprise looks like the real thing, and in the current economic conditions, money borrowed to fund these ventures could be repaid at little or no interest, which puts Vin Group in a completely different position to Daewoo Group, which laboured under huge leveraged debt, at then high interest rates.
Just recently VinFast held a public competition in Vietnam pitching a car developed by Pininfarina, alongside a concept from Italdesign. The Italdesign concept (below) was chosen by 60% of the entrants, so the next car will be based on this concept.
I can't wait to see how VinFast's ambitious plans work out.