VinFast Loses Big Despite Booming Profits!

It seemed like a Cinderella story at first – an upstart carmaker from Vietnam listed this year briefly became worth more than Volkswagen and General Motors.

But now, VinFast is facing a major setback thanks to huge losses of over $1.4 billion dollars.

The three months to September alone saw around $623 million in losses for VinFast, despite increased vehicle shipments of 10,027 cars during that time period.

Unfortunately for the company, its new US model hasn't been well-received by reviews and that has hit their sales hard. 

VinFast Aims to Sell 50,000 Cars this Year

VinFast, the Vietnamese car maker, aims to sell 50,000 cars this year despite only shipping out 21,000 in the first nine months of the year. The breakdown between their international and home market sales has not been disclosed by the company. 

It appears that there have been strong gains in North America as VinFast’s revenues for Q3 2023 were more than double those from the same period one year ago at $342.7 million - a 3% increase over the previous three months.

However, VinFast's ambition to become Vietnam's answer to Tesla has hit some setbacks due to bad reviews and increased investment required beyond what they had initially estimated.

The dramatic slide during Q4 of 2023 will no doubt be in investors' minds when considering future investments into this upstart auto manufacturer from Hanoi.

Owner Pham Nhat Vuong has Pledged to Induce $2.5bn to the Company

Pham Nhat Vuong, Vietnam’s richest man and owner of VinFast (the country’s only carmaker) has pledged to induce $2.5 billion dollars to the company in grants and loans. This money is expected to come from Vuong himself as well as other major shareholders over the next 6 months.

The future of VinFast relies heavily on vehicle sales for its Green and Smart Mobility (GSM), which is a Vietnamese taxi company that happens to be controlled by Vingroup, the parent company for VinFast.

With this injection of capital, they now have plans for global expansion with factories in India and Indonesia. The booming profits are likely thanks to their new electric models that have become incredibly popular within both domestic customers and foreign markets alike.

VinFast is Also Planning Cost-Cutting Measures

VinFast, the first Vietnamese carmaker to tap into the global market, is also looking at "cost-cutting measures" in order to remain competitive. This news follows recent reports that the company was struggling amidst booming profits.

So, despite having strong momentum in the business – with growing delivery volumes and increased revenues as well as an improved path to profitability – VinFast knows it still has room for improvement.

“We are working on identifying opportunities which exist across our cost base including manufacturer supply chain diversification and regional overhead reduction," said David Mansfield, VinFast's chief financial officer!

The end goal? To strengthen their balance sheet even more so they don't have anything holding back success or progress when it comes to producing excellent electric vehicles for a larger customer base!

The Shares of VinFast have Fallen Nearly 90%

VinFast is quickly becoming the biggest loser in the stock market this year. Despite posting booming profits, shares of VinFast have been plummeting since being listed on the US market in August through a merger with SPAC.

The Vietnamese carmaker controlled by its billionaire founder is currently trading at under $10, investors appear to be unimpressed with the amplified buzz behind VinFast.

What’s more, these losses could be attributed to the high valuation of the company when it went public (more than $200bn) – as it is currently valued at $19bn, making it more valuable than both Nissan, Renault and Volvo Cars despite having limited experience in auto manufacturing.

Experts are speculating that investors may have overestimated their investment despite VinFast’s good fundamentals, dealing a big blow to its founder who was hoping for an immense surge following its initial public offering.

Nonetheless, time will reveal whether or not shares will pick back up again after such a dramatic drop!

The Bottom Line

Despite reaching new heights in revenue, VinFast was unable to recoup deductions and losses of $1.4 billion. The automobile industry as a whole has weathered tumultuous times over the past year thanks to global pandemics and trade interruptions.

Yet despite this climate, VinFast has continued producing cars with reasonable success within Vietnam’s borders—and with their bold step of joining NACS in 2022 they are well-positioned for future profits.

Nevertheless, there is still much work ahead if VinFast wants to recover its exorbitant loss from this past year; only time will tell if they can achieve it or not!
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