Companies Carmaker VinFast posts $284 mln loss

1 min readUpdated Sep 10, 2020Sep 11, 202011:05 PM

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Vietnamese automaker VinFast posted a loss of nearly VND6.6 trillion ($284 million) in the first half, up four times year-on-year.

The subsidiary of Vietnam’s largest private conglomerate Vingroup saw owner’s equity rising 10.8 percent year-on-year to VND28.1 trillion ($1.2 billion) by the end of June. Its asset value by the same date was over VND100 trillion.

Pham Nhat Vuong, chairman of Vingroup, had earlier said that losses were expected for both automaker VinFast and smartphone producer VinSmart over the next three to five years as they work to increase their market share.

Vingroup recorded H1 revenues of VND6.58 trillion from cars, electric bikes and smartphone sales, triple that of last year.

VinFast has recently entered the luxury market with its new SUV, VinFast President. The company sold over 5,100 cars in the first quarter to rank fifth among auto brands in Vietnam.

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What this means

VinFast's substantial H1 loss and Vingroup's stated expectation of losses for years indicate an aggressive, capital-intensive strategy to seize market share rather than immediate profitability. This move pressures established automotive players in Vietnam, who now face a well-funded local challenger willing to absorb losses for growth. Unlike competitors focusing on gradual expansion, VinFast is betting on rapid market penetration, evidenced by its quick ascension to fifth place in Q1 sales and recent luxury SUV launch. The significant asset value of over VND100 trillion suggests deep pockets for this long-term play, but also considerable risk. We should watch how their Q2 sales figures reflect uptake of the new luxury models and overall market traction.

Rajiv Menon · Retail News Asia newsroom

Questions & Answers

How much was VinFast's loss in the first half of the year?

VinFast recorded a loss of nearly VND6.6 trillion ($284 million) in the first half. This figure represents a fourfold increase compared to the same period last year.

What was VinFast's asset value and owner's equity by the end of June?

By the end of June, VinFast's owner's equity had risen to VND28.1 trillion ($1.2 billion), a 10.8 percent year-on-year increase. Its total asset value exceeded VND100 trillion.

What is the broader strategy for VinFast regarding its expected losses?

Losses are anticipated for VinFast over the next three to five years as part of a strategy to increase its market share. This outlook was previously stated by Pham Nhat Vuong, chairman of parent company Vingroup.

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