Sun, Dec 15, 2019 - Page 16 News List

Vietnam’s richest man bets US$2 billion on selling cars to Americans

Pham Nhat Vuong aims to pull off a feat that has proven elusive to many Asia-based auto companies, as American car owners are more demanding and the country has strict safety regulations

By Nguyen Kieu Giang and K. Oanh Ha  /  Bloomberg

A Vinfast Lux A2.0 car waits for a test drive at the automaker’s factory in Haiphong, Vietnam, on Wednesday last week.

Photo: Bloomberg

The billionaire behind six-month-old Vietnamese auto start-up VinFast plans a feat even Toyota Motor Corp and Hyundai Motor Co could not pull off during their early days: Sell a car in the US.

Pham Nhat Vuong, the Southeast Asian country’s richest man and now in charge of the new automaker, is so intent on exporting electric vehicles to the lucrative US market in 2021 that he is plowing as much as US$2 billion of his own fortune to reach that goal.

His cash would account for half the capital investment of VinFast, which earlier this year began delivering cars to Vietnamese consumers with BMW AG-licensed engines and aims to expand into electric vehicles (EVs).

“Our ultimate goal is to create an international brand,” the 51-year-old tycoon said in an interview at the Hanoi headquarters of the automaker’s parent, Vingroup JSC, which Vuong founded and holds the title of chairman. “It will be a very difficult road and we will have to put in a lot of effort. But there’s only one road ahead.”

The homegrown vehicles made under Vuong’s sprawling real-estate-to-hospitals conglomerate faces an uphill battle to succeed overseas: Automakers such as India’s Tata Motors Ltd and Malaysia’s Proton Holdings Bhd struggled to win over consumers away from their home turf. Even in Vietnam, VinFast Trading and Production LLC has formidable competition from established foreign players such as Toyota, Ford Motor Co and Hyundai.

VinFast follows a long list of Chinese automakers that have also had ambitions to sell vehicles in the US going back more than a decade.

Although the plans have yet come to fruition, Guangzhou Automobile Group Co (廣州汽車集團), Zotye Automobile Co (眾泰汽車) and others have set up local sales units, and research and development operations to show just how serious they are.

Some Chinese brands have also exhibited at US auto shows in the past few years.

The tycoon, whose net worth is US$9.1 billion, according to the Bloomberg Billionaires Index, is undaunted.

Vingroup sold some shares last year and Vuong plans to sell as much as 10 percent of his own shares to raise funds for the ambitious project. He owns 49 percent of VinFast, while the parent, Vingroup, holds 51 percent.

The automaker would not be profitable for as many as five years, Vuong said, adding the local market is “too small” and overseas sales are key to becoming profitable.

Vuong directly owns 26 percent of Vingroup, according to Bloomberg data. Vietnam Investment Group JSC, in which Vuong has about a 92 percent stake, holds 31.6 percent of Vingroup.

VinFast would have to overcome an even more daunting task of winning over demanding consumers in the US and other developed markets, where emissions and crash standards are stringent.

Adding to these challenges is successfully manufacturing and selling electric vehicles. Many Chinese start-ups, backed by billions of US dollars in funding, bet on the prospects for EVs in the world’s biggest auto market, but few are making money.

BAIC BluePark New Energy Technology Co (北汽藍谷新能源科技), China’s biggest maker of pure electric vehicles, forecasts a loss for this year. Unprofitable NIO Inc (蔚來汽車), which is traded in New York, has struggled to assuage concerns that it is running short on cash amid sputtering EV demand.

VinFast’s first EV would not roll off its assembly line until late next year, but Vuong said he plans to export those vehicles to the US, Europe and Russia in 2021.

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