Mixed bag: VinFast’s new cars cause excitement, skepticism

Nguyen Duy Hung, chairman of the Saigon Securities Incorporation (SSI), posted on his Facebook page that he was “lucky” to have his order of five VinFast cars approved.

VinFast, a subsidiary of Vingroup, showed off two cars, a sedan and an SUV, at the Paris Motor Show in France Tuesday just a year after its incorporation, grabbing the attention of the local and international media.

Hung said he would be one of the first people to get the cars.

“Who doesn’t want to be one of the first to own a car made by a Vietnamese brand?”

Tran Phuong Anh, an office worker in Hanoi, was excited to see Vietnam’s first cars revealed in Paris.

She was impressed to see the “shiny and luxurious” new sedan introduced on stage by former England footballer David Beckham.

“It was a moment of pride for Vietnam’s auto industry,” she told VnExpress International.

Vu Ta Thang, a car salesperson in Hanoi, said the looks of the two vehicles would surely attract young people.

“The cars look like a BMW with a Vietnamese brand,” he said.

But many people are concerned the car would be costly and uncertain about its quality.

Le Anh, an automobile expert, believes the sedan will be priced at VND1.4 billion ($60,869) and the SUV at VND1.8 billion ($78,260).

A VnExpress poll of over 1,200 people found 50 percent expecting the cars to cost less than VND1 billion ($42,550). Only 6 percent said they would cost more than VND1.5 billion ($64,200).

One reader identified as Tung Le said the sedan should be priced at VND700 million ($29,780) and the SUV at VND850 million ($36,170), adding it would be “much harder [to sell]” if the prices go higher.

Mike Dunne, an independent industry analyst who has spent more than three decades in Asia, was concerned whether VinFast cars would have demand in a country with an average income of $2,385 last year.

Vietnam’s population is around 93 million, larger than Korea’s, but car consumption is only around 300,000 units a year, he told U.S. media CNBC.

While there is little doubt the market would grow, it won’t happen fast enough to absorb VinFast's production, planned at 250,000 vehicles annually, he said.

Thang, the car salesperson, said Vietnamese only buy cars with good resale value.

Durability and reliability are why they love Japanese cars, and people in their 40s and 50s would wait for at least one or two years to evaluate VinFast quality, he said.

“Customers would prefer to invest a large amount of money in other brands that have a longer history in the country.”

Bui Ngoc Huyen, chairman of Vinaxuki, which tried to produce a car but ceased production just before its first car was to be released in 2012, said Vingroup’s deep pockets would help, but warned that building a brand takes time.

“You have to move from producing small and cheap cars to luxury ones,” he told Reuters. “It will take several years for a new carmaker to fine tune its products and win the confidence of consumers. It will take between 10 and 20 years.”

Other experts are concerned that VinFast will have trouble establishing a brand in Vietnam where the supporting industry is weak.

There are only 358 businesses in the auto industry in Vietnam compared to 2,500 in Thailand, according to the Ministry of Industry and Trade. Over 90 percent of auto parts are imported, it added.