Japan and South Korea cracked the American car market. Now a company from Vietnam wants to try

CNN, CNNBUSINESS

By Peter Valdes-Dapena, CNN Business

Vinfast, a car company based in Vietnam, unveiled a pair of electric SUVs Wednesday that it plans to begin selling in the United States next year.

A subsidiary of Vietnam’s enormous VinGroup conglomerate — which owns companies in technology, healthcare, amusement parks and even a university — Vinfast unveiled its first models, a pair of gasoline-powered luxury sedans, at the 2018 Paris Motor Show. Both sedans used engineering from German luxury automaker BMW, including its engines. The company now also offers gas-powered SUVs in Vietnam with BMW engines, including a high performance model called the President.

But the company has much bigger ambitions.

“We want to become a global brand,” said Vinfast Global CEO Michael Lohscheller, “and if you want to become a global brand, you have to come to the US.”

The two electric crossovers unveiled at the Los Angeles Auto Show on Wednesday, the VF e35 and VF e36, were designed by Italy’s Pininfarina, which has also designed other gasoline-powered cars for VinFast. Pininfarina is most famous for its history designing classic Ferraris. More recently, Vinfast has been shifting to electric vehicles, like the small VF e34 crossover being offered in Vietnam.

The Vinfast VF e35 has a driving range of up 310 miles on a charge, according to Vinfast. The e36 can go up to 422 miles on a charge. Both have a variety of semi-autonomous driver assist features similar to those available on other luxury SUVs such as self-parking and semi-automated driving.

In the United States, Vinfast will sell only electric vehicles, Lohscheller said, because that’s where the company sees its largest opportunity for growth. The electric models are based on Vinfast’s own engineering, said Lohscheller.

“The entire market is completely disrupted,” he said, “so we’re going immediately to EV only, and with that we think that the market potential is growing significantly.”

Vinfast is also facing increased competition from companies like Rivian and Lucid, not to mention Tesla, for potential electric vehicle buyers. Those companies could also be opening a path for a new entrant like Vinfast, said Stephanie Brinley, an auto industry analyst with IHS Markit. Car shoppers, especially those looking at electric cars, are now more used to seeing unfamiliar names.

Lohscheller took over as Vinfast CEO at the end of July after having been CEO of Germany’s Opel, now a subsidiary of Stellantis, for the past four years. Before that, he was a high-level executive at Volkswagen.

Vinfast has hired a number of executives, engineers and designers from around the world and that should help them understand consumers in markets like the United States and Europe, said Stephanie Brinley, an auto industry analyst with IHS Markit.

“They’re bringing them in full time, not just as consultants,” she said. “I think that’s going to help them when they try to enter this market.”

But Vinfast currently has no plans to enter China, another one of the largest automotive markets in the world. said Lohscheller.

Vinfast follows other Asian automakers that have entered the highly competitive US market. Hyundai and Kia, two related South Korean brands, entered the US market in 1986 and 1992, respectively, with cheap compact cars. Decades before, Japanese brands like Toyota, Honda and Subaru got their start in the US with a similar strategy.

While the vehicles Vinfast is bringing to the US don’t seem like tiny budget models, the company is, to some extent, following the model of their Asian predecessors, said Brinley. Hyundai and Kia have found success with customers who recognize they can get, for instance, a nicely equipped three-row SUV with luxury-like appointments for a price similar to a smaller vehicle from a luxury brand.

“Our branding position here in the US is inclusive,” said Nguyen Van Anh, CEO of VinFast US. “We want to provide a premium product at a reasonable price.”

Vinfast has not yet said how much, exactly, its new SUVs will cost.

In addition to the two electric SUVs, VInfast also recently unveiled its US headquarters in Los Angeles. For now, the company plans to build these SUVs in Vietnam but there are plans for a US factory in the second half of 2024, said Lohscheller.

The company will initially begin selling its electric SUVs next year in California through 60 company-owned outlets rather than through independent dealers, said Nguyen, as most cars in the US are currently sold.

“We want to provide an outstanding customer service to our customers,” she said. “So we want to control the customer journey from A to Z.”

Bypassing independent franchised auto dealers, something electric car start-ups like Tesla and Rivian also do, has led to legal battles in a number of states where an automaker selling directly to consumers violates state laws. Vinfast plans to roll out Vinfast showrooms in other US states in the coming years, Nguyen said.

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