By Ben Klayman
(Reuters) – Vietnamese electric-vehicle maker VinFast, which made a splash this week when its shares debuted on the Nasdaq, has stirred a mixture of warning and curiosity amongst sellers with a latest change in the way it will distribute its vehicles within the U.S. market.
The carmaker, which has shipped practically 3,000 autos to North America since late final 12 months, mentioned on Tuesday it was altering its distribution mannequin, which has been based mostly on Tesla’s direct-to-consumer strategy.
Now it needs to promote via sellers as effectively.
A number of U.S. sellers contacted by Reuters are open to the thought, however mentioned they should hear extra particulars about VinFast’s plans, together with gross sales technique, necessities for sellers, the corporate’s components distribution plan and the automobile guarantee.
“Is there room for extra manufacturers? Yeah, there most likely is. It is simply too early to inform,” mentioned George Glassman, president of Glassman Automotive Group, which sells 5 automotive manufacturers exterior Detroit. “I would must see extra earlier than I might make an clever determination.”
VinFast made its U.S. market debut on Tuesday and shares soared, at one level giving the startup a market valuation of $85 billion – far increased than that of Ford or Normal Motors on the time. Since then, VinFast shares have retreated, and had been down 17.2% at $24.92 at noon on Thursday.
As VinFast ramps up efforts, it faces robust assessments. The brand new hybrid gross sales plan is simply one other problem and the luxurious carmaker is already speaking to sellers.
“Opening our personal shops is nice nevertheless it takes a number of time,” CEO Le Thi Thu Thuy advised Reuters on Tuesday. “Becoming a member of forces with different companions to go sooner has at all times been our nature.”
Officers at VinFast, which has opened 122 showrooms globally as of June with most within the U.S. West, didn’t instantly reply to requests for additional touch upon seller technique.
U.S. sellers mentioned there are too many unanswered questions, together with how VinFast will distribute components wanted to make repairs.
‘DEVIL’S IN THE DETAILS’
“The seller needs to be involved with their (personal) popularity,” mentioned Scott Fink, CEO of Fink Automotive Group, which owns VW and Subaru shops close to Tampa, Florida. “If I promote a automobile to you and you may’t get a fender, you are going to be pissed off at me. I am not going to do this.”
“The satan’s within the particulars,” he added.
Whereas Tesla has established itself as EV market chief, different startups have struggled to get off the bottom, sellers mentioned. On high of that, VinFast can be competing with established manufacturers with their very own EVs, together with GM, Ford and Hyundai .
“The very first thing you must take a look at is are you going to be round in 5 years? That is an enormous concern,” mentioned Andrew DiFeo, seller principal at Hyundai of St. Augustine, south of Jacksonville, Florida.
A number of sellers mentioned VinFast may have to supply sweetened revenue margins to sellers to account for the added danger. On high of that, the automaker may have to offer industry-leading guarantee protection on its autos to guarantee consumers.
These potentialities go away {industry} advisor and former GM government Warren Browne chilly.
“It’s a loss of life technique,” he mentioned of the plan to make use of sellers. “There may be an excessive amount of worth extracted by serving sellers. That is a method Wall Avenue will whip them on.”
However with dealerships promoting for historic costs, sufficient seller homeowners will make the wager, mentioned Rhett Ricart, CEO of Ricart Automotive Group in Columbus, Ohio, which sells 10 auto manufacturers. Many additionally respect that VinFast is constructing a U.S. plant.
Sellers additionally mentioned the shortage of a longtime identify will not be a deal-breaker as Toyota, Honda and Hyundai all began small and grew into successes.
“If it is a good product and it is received an ideal guarantee on it, Individuals will purchase it,” Ricart mentioned.
In the end, sellers are at all times searching for distinctive alternatives, mentioned Beau Boeckmann, president of Galpin Motors, which sells 12 manufacturers within the Los Angeles space together with EV startup Polestar.
Boeckmann, who visited VinFast’s plant in Vietnam final 12 months and met with CEO Thuy, stays open to the chance.
“Sellers are entrepreneurial they usually’re risk-takers,” he mentioned. “Gross sales individuals like to be offered.”
(Reporting by Ben Klayman in Detroit; Further reporting by Phuong Nguyen in Hanoi; Modifying by Matthew Lewis)