VinFast’s VF 3 might be its smallest electric car yet, but it packs a giant punch. This mini-SUV has the potential to be a game-changer for the Vietnamese automaker. By disrupting the domestic market with its affordability and appeal, the VF 3 can become a significant force for VinFast’s ongoing global expansion plans. 

VinFast, the Vietnamese electric vehicle (EV) company, has seen its stock price rise steadily on the Nasdaq exchange since announcing on May 7th that it began accepting deposits for its new VF 3 model in the domestic market. The stock reached its highest level in over a month on May 13th.

By May 16th, VinFast reported receiving nearly 28,000 deposits for the mini-SUV within Vietnam. This news fueled another surge in the automaker’s stock, bringing its five-day gain to an impressive 30 percent.

VinFast’s performance stands out even compared to the broader market. Major indexes like the S&P 500 and the Nasdaq, which are heavily weighted toward technology stocks, have not seen similar gains.

While VinFast is expanding globally with operations in the US, Canada, Indonesia, and Thailand, the company is also prioritizing its domestic market in Vietnam. The strong reception for the VF 3 highlights the potential VinFast sees in its home country.

Mini e-SUV scores big with Vietnamese drivers

VinFast recently announced a record-breaking 27,649 non-refundable pre-orders within just 66 hours, setting a new benchmark for the Vietnamese automotive industry. This early surge in interest suggests that the VF 3’s design and affordability could resonate with Vietnamese consumers, potentially propelling it to national car status.

In addition to record sales, the VF 3 has become a social media phenomenon in Vietnam, topping trend rankings and sparking the most online discussions since VinFast opened pre-orders.

VinFast has stirred the domestic auto market. This gamble in the multi-billion dollar industry follows last year’s Vingroup annual meeting, where VinFast CEO and Vingroup chairman Pham Nhat Vuong declared electric vehicles the group’s most promising venture, hinting at a future mini electric car model.

Fast forward to May 16, 2024, and VinFast’s prophecy appears to be holding true. The company announced nearly 27,700 reservations for the VF 3 after 66 hours, a year after Mr. Vuong’s initial mention. While this pales in comparison to the initial surge of 12,000 orders within 6 hours for the larger VF 8 and VF 9 models in 2022, the significance lies elsewhere.

Previously, VinFast allowed for risk-free deposits on earlier models, leading to a number of casual reservations. This time, however, the VF 3’s non-refundable 15 million VND deposit discourages impulsive orders. This suggests a stronger commitment from potential buyers.

The number of reservations for the VF 3 is exceptional within the Vietnamese auto market. The best-selling car of 2023, the Mitsubishi Xpander, reached nearly 20,000 units sold. Even Honda’s entire 2023 sales figures (23,802 cars) fall short of the VF 3’s pre-orders within 66 hours.

With a projected delivery window of May 2024 to August 2024, VF 3 sales could reach an average of 4,000 vehicles per month, surpassing the current record of less than 1,600 for any single car model.

The VF 3 has become a social media phenomenon in Vietnam.

Industry experts attribute this success to the VF 3’s novelty, competitive pricing, and VinFast’s proven salesmanship. The company, a subsidiary of Vingroup, has a history of generating fervent demand across various sectors, from services and real estate to now automobiles. Notably, the VF 3 marks the Vietnamese market’s first car to be sold through social media livestreaming.

The record-breaking pre-orders for VF 3 are fueled by a combination of attractive pricing and a booming electric vehicle market.

The International Energy Agency (IEA) forecasts a significant increase in electric car sales for 2024, reaching 17 million units globally – a 21 percent jump from 2023. This surge underscores the growing importance of affordability in driving wider EV adoption, according to the IEA.

The VF 3 introductory offer starts at just 235 million VND (approximately $9,248, battery subscription) and 315 million VND (approximately $12,390, battery included) for customers who placed deposits from May 13 to May 15.

For a down payment, customers only need between 50-70 million VND (approximately $1,965-$2,750). The remaining balance can be financed through affordable installments with a total monthly payment of just over 2 million VND (approximately $78.5) over 8 years. Notably, purchasing the VF 3 with an upfront full payment incurs only half the expense of the least expensive gasoline-powered car model presently on the Vietnamese market.

Why the tiny VF 3 is a big hit?

A local survey conducted by an online magazine sheds light on the VF 3’s potential customer base. The survey pitted the VF 3 against Chinese competitors, with nearly 90 percent of respondents (3,089 out of 3,511) choosing the VinFast model.

Another survey offered insights into the VF 3’ target audience. The results showed a broad demographic appeal, with the largest segment (25.5%) being working women who value the car’s affordability and maneuverability for daily errands and child pick-up duties. This suggests the VF 3’s compact design and ease of handling in tight spaces are particularly attractive to this demographic.

Small families (with 1-2 children) also emerged as a significant potential customer base (22.2%). The VF 3’s practicality and size make it a suitable choice for urban living while accommodating the needs of a growing family.

A survey with 2,420 participants explored who would be the most suitable buyer for the VinFast VF 3.

Beyond these primary groups, the survey revealed a surprisingly diverse customer base. With roughly equal interest (around 16%) from those seeking a second car, young adults, and office workers, the VF 3’s versatility and budget-friendly price point appear to resonate with a wide range of lifestyles.

The car’s suitability for suburban areas is another noteworthy aspect. The VF 3’s weather protection is a key factor for Vietnamese consumers living in the suburbs with longer travel distances. Additionally, the prevalence of ground-based homes in these areas makes home charging a viable option, maximizing the benefits of electric vehicle ownership for suburban residents.

A domestic springboard: VinFast leverages vietnam for global growth

Despite its ambitious global expansion plans, VinFast remains keenly focused on exploiting the substantial potential of its domestic market. Vietnam presents a compelling opportunity for the automaker, boasting a young population, a rapidly expanding middle class, and a rising demand for cars, particularly among young people and women. Additionally, a growing environmental consciousness in Vietnam fuels the desire for green transportation solutions.

Standard Chartered Bank forecasts robust Vietnamese economic growth in 2024, projecting a GDP increase of 6.7 percent (6.2% in the first half and 6.9% in the second half). This suggests a promising outlook for Vietnam’s economic recovery and continued growth. The country’s manufacturing industry stands to benefit significantly from the ongoing global supply chain shift, creating numerous development opportunities.

A report by global wealth intelligence firm New World Wealth and investment consulting firm Henley & Partners projects Vietnam to experience the world’s strongest wealth growth in the coming decade. According to Andrew Amoils, an analyst at New World Wealth (NWW), “Vietnam is solidifying its position as a global manufacturing hub, poised for a 125 percent increase in asset accumulation within the next ten years.”

Vietnam’s rising prosperity is fueling a surge in car ownership, particularly among young people. This trend, coupled with growing environmental awareness, has attracted international automakers to the Vietnamese market. Despite this influx, VinFast remains the dominant player in the domestic electric vehicle space.

The VF 3, targeting young consumers with a strong desire for car ownership, bolsters VinFast’s position. This strategic move, combined with the company’s commitment to infrastructure development, brand reputation, and long-term vision, position them for continued dominance in the Vietnamese EV market.

As VinFast expands its global footprint, solidifying its domestic market dominance will be crucial to achieving its ambitious goal of selling 100,000 vehicles in 2024.

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