HANOI - As Vietnam's biggest conglomerate Vingroup doubles down on its electric vehicle business with ambitious global expansion plans, it faces growing financial risks stemming from loss-making unit VinFast Auto.
But struggling to penetrate even its home market, VinFast last year generated 82% of its $1.1 billion of vehicle sales from companies that are part of Vingroup or owned by Vuong, who is also VinFast's CEO and effectively controls nearly 98% of the Nasdaq-listed EV maker. The heavy discounting highlights the extent of sales pressure VinFast is facing as its lineups from sport utility vehicle VF8 to the VF5 crossover have yet to attract significant interest from retail buyers, keeping production rates at unprofitable levels.
Kengo Kurokawa, head of research firm Asia Plus, said he did not think GSM's ride-hailing business model was sustainable given its high cost structure and the market's low profitability. It largely makes sense only as an advertising tool for VinFast, he said.