David Vu 06/10/2018

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Which strategy for Vinfast to adopt in Vietnam auto marketplace?

We have seen a great debut of Vinfast at Paris Motor Show. Being a Vietnamese, we feel proud of that as Vietnam has joined the automobile arena of the world. Today we will talk about which can be possible strategy for Vinfast to compete with existing competitors and succeed in the marketplace.

1. Differentiation strategy
As per the debut at Paris on two Vinfast models which are Lux A2.0 and SA2.0, we think that cost leadership may not be a suitable strategy for Vinfast as the car model is using upmarket features with the sophisticated design of Pininfarina and top-notch engine of BMW. However, these two models may be produced only for a niche market with high end segment which I guess it will aim at business persons and high income purchasers. In this case, a focus differentiation strategy may be applied with these car models. That is great as the Vietnamese car brand also produces luxurious cars targeted at high net worth people. Nothing wrong with that. I do hope it also can be sold cross border to many countries around the world. The question is most Vietnamese people have low-medium income then how they can afford those car models? If so, I guess Vinfast will produce cheaper car models to target at this low-medium segment. Is it sensible?

2. Cost Leadership strategy
After these two high end models, I believe that Vinfast will produce cheaper models in mass production to target at a mass market segment and that will be the key objective to materialize the auto dream of Vietnamese people. If so, the question is will Vinfast keep the same Italian design and German engine? The answer may be no as it will be costly and inefficient for the company in terms of revenue margin and market penetration. Will Vinfast use Chevrolet engine as it has taken over Vietnam-based Chevrolet recently? If that is the case, the most suitable strategy for Vinfast in that case is to adopt a cost leadership strategy to be able to succeed in this segment. It will help Vinfast penetrate the market quickly and thereby increase market share with its manifestly agile processes. Using this strategy, at another side, it will yield a modest profit margin but augment the market share in an amazing way.

Now, let’s wait and see which strategy Vinfast will adopt to. Anyway, we do hope Vinfast will create breakthroughs for infant automotive industry of Vietnam to foster whole enginery industries for the country. Personally speaking, I do hope those Vinfast cars will be ubiquitous on all roads and streets in Vietnam.

David Vu

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