VinFast, the Vietnamese electric vehicle manufacturer, is apparently planning a complete overhaul of its European business operations. According to a report by the German portal Elektroauto-News.net, all VinFast showrooms and service centers across Europe are set to close by the end of this week. Several options are being considered for the company’s next steps in the region.
The closure timeline appears to be concrete, with a ‘showroom shutdown’ scheduled for May 9, followed by the finalization of severance agreements by May 22. Asset liquidation is expected to take place in the second quarter, along with the termination of lease contracts. The cited reasons for this strategic shift include “macroeconomic conditions, tariffs, trade disputes, and general uncertainty.”
As quoted from an internal document by Elektroauto-News.net, “The ongoing uncertainty makes it impossible to continue – the direct sales model no longer works.” This statement highlights the company’s decision to abandon its direct sales model, which was a key strategy when VinFast entered the European market, following Tesla’s example. Instead, the company is planning to sell its vehicles through dealerships in the future.
This change explains why only about 90% of staff were informed of their dismissal in early May, while the remaining employees are expected to be transferred to new retail partners. However, the names of these partners have not been disclosed, and it remains unclear whether such partnerships are already in place, given the tight schedule.
This strategic shift is not without precedent for VinFast. In the US, where the company’s market launch has been sluggish, VinFast’s 38 direct-sales outlets across 16 states are also set to be closed in favor of a franchise model, as announced in the company’s 2024 annual report. The company has also initiated plans to develop a widespread dealer network across major cities in Europe.
The recent financial results may have contributed to this strategic shift in both the US and European markets. Despite nearly tripling its electric vehicle sales to around 97,400 units last year, most of these sales were in Asia. VinFast remains deeply in the red, with a net loss of approximately $3.18 billion against revenue of around $1.8 billion.
The VF 6, the second VinFast model to be introduced in Europe after the larger VF 8, had just begun deliveries before this announcement. The change in sales strategy marks a significant development in VinFast’s European operations, reflecting the challenges faced by the company in establishing a strong presence in the competitive European electric vehicle market.
