Publishing the loss of 300 million VND/car, Vinfast’s Deputy General Manager Nguyen Thi Van Anh said that the company was planning on listing on the stock market in the coming time.
Yesterday, Vinfast had surprised everyone by becoming one of the rare car brands to publish the production cost. Why did Vinfast decide to publish the numbers which belong to the business secret, which none car developer wants to mention?
Information transparency in every activities has always been a consistent rule of Vingroup
. Moreover, we are sure that there are going to be a listing plan for Vinfast
in the coming time, therefore, this information transparency is totally normal. And these figures will be audited by private domestic and international audit agency.
As we mentioned, the initial price published by Vinfast is the “super sale” price, including the “3 Nos” and the incentives. In which, the “3 Nos” stands for not including the depreciation, the financial cost (the interest of the loans required for factory construction, and mobilized capital, etc.) and the company’s interest. Moreover, we also have special price incentives for customers choosing Vinfast in the beginning.
With such a way of constructing prices, instead of descending from the peak, VinFast car prices will go up slowly according to the published plan.
In what stage does the loss of up to VND 300 million per vehicle lie?
Factory price of each VinFast Lux A2.0 standard version at the present time is 980.6 million. In which, VND 783.7 million is the production cost. With 412.1 million taxes, the price of Lux A2.0 was raised to VND 1,392 billion, without depreciation, financial and investment costs as well as no profit. .
However, we only sell to customers with VND 1,099 billion / vehicle because of the "3 No plus bonus" policy. Therefore, VinFast is accepting a loss of nearly VND 300 million per vehicle, and this loss is cut directly into our "pocket" because 412.1 million dong of tax is an immutable amount to be paid, accounting for nearly 50 % of the actual car price. If this number is reduced, the car price will be much better.
There are many opinions that VinFast is receiving great support from the State. Can you tell what that support is?
We do not have any special support from the State - apart from the general policies like all import businesses and foreign enterprises operating in the field of automobile manufacturing and trading in Vietnam.
Currently, we are still fulfilling tax obligations to the state, including import taxes, excise taxes, value added taxes ... and other costs.
In Malaysia, India or China, or Japan and South Korea in previous decades, domestic automakers have always enjoyed many preferential policies from the government to develop the car manufacturing industry and to create a competitive advantage for internal brands. So how does VinFast expect to receive support from the Vietnamese government?
Obviously Vinfast hopes to receive suitable assisting policies from the Government to effectively start-up in a field with too many competitors such as car manufacturing. However, we understand that Vietnam is still a developing country, and major corporations such as Vingroup in general or Vinfast in particular need to cooperate with the government in developing the national economy and improving the life quality of the people.
Therefore, we have clearly determined that we need to be active, and try to our heart’s content to provide Vietnamese consumers with highly-qualified products for reasonable prices, thus improving the competitiveness of the “made in Vietnam” brand, fairly competing with international brands not only on the Vietnamese market but also on the international market.
Where do the company get the money to compensate for the loss of 300 million VND/vehicle as thousands of Vinfast have been sold?
Vinfast has a desire to build a Vietnamese car brand that is well-known worldwide, not only to meet the domestic car demand, but also to aim at the goal of winning the international market. The whole Vingroup system is focusing all our resources on Vinfast. We have implemented the “saving” policy, selling the shares of the Corporation and the Subsidiaries, etc. to have enough financial power for this project.
Is the low localization rate the reason for the large production cost of VinFast cars?
As I have analyzed, the production cost of VinFast cars is not really high, but VinFast has to pay too much taxes and fees. This is why the price of VinFast cars produced and sold in Vietnam may be higher than the price of Mercedes cars manufactured and sold in Germany.
Increasing the localization rate is the main strategy that VinFast is pursuing in order to compete with foreign brands, so we have been practicing to deploy right from the construction of the factory. Thanks to the increase in the localization rate, our actual "3 No" rate is currently lower than it was announced a year ago, when not yet ready for mass production.
Currently VinFast has produced a part of the engine and most of the body, so it significantly reduces input costs. In addition, VinFast has also localized many other components such as gearboxes, front axles, rear axles, body parts, car seats, interior cladding ... With the components that have to be imported, we have negotiated with suppliers to get the best price.
Regarding management costs, right after conducting SOP (mass production and delivery of cars to customers) in July 2019, VinFast has actively optimized production processes, thereby significantly reducing the production and management costs.
We believe that, if there is more support from the government's tax and fee policies, along with the continuous efforts of VinFast, the price of cars will continue to be reduced in the near future.
What will the roadmap to increase the rate of Vietnamese components in Vinfast cars will be like?
On the one hand, VinFast is continuing to invest and further promote the formation and development of ancillary industrial park right in the VinFast manufacturing complex, thereby gradually increasing the localization rate and creating a value chain for Vietnam's industrial products.
On the other hand, we have established automobile design research institutes (especially electric cars), electric motorcycle design research institutes, and battery research institutes (including battery cell development and packaging research). Research Institute of intelligent and self-driving vehicle controlling technology, etc. to increase the content of Vietnamese gray matter and towards sustainable development.
Because VinFast's goal is not only to reduce car prices. We look forward to fulfilling the mission of an inspiring and inspiring business in the field of automobile and electric motorbike manufacturing, thereby contributing to building and promoting the development of the home-grown industry.