From Noodle Bars to Cars: Vinfast’s $10 Billion Automotive Story

From Noodle Bars to Cars: Vinfast's $10 Billion Automotive Story

One of the world’s most ambitious car companies started with very humble beginnings. Here’s the story

Noodles are not the obvious seedling from which to sprout one of the world’s most ambitious car companies. However, it happened, and it’s quite a story.

In the early 1990s, a brilliant Vietnamese mathematician, Phạm Nhật Vượng, arrived in Ukraine. His parents weren’t rich, and neither was he, because he had just graduated from a Russian university. He opened a small noodle bar and his cheap meals found a ready market among local students. He quickly built a huge dried food business there and eventually sold it to Nestlé for $150 million.

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Most of us would have stopped there, rich beyond our fantasies. Not Vung.

Meanwhile, he had started real estate and resort businesses in Vietnam in the early 2000s. In 2015, he became the country’s first billionaire.

His realm is called the Vin group. In 2016, it ran to residential, shopping malls, resorts, theme parks, schools, universities, non-profit hospitals, pharmaceuticals, AI and big data. The point is, Vượng saw a ceiling for all of this. The majority had little room for international growth.

But cars… oh yeah, if he could get into the car world, he could go all over the world and take money home. And so he founded the car company Vinfast. He had no staff, no experience, and no factory or development center.

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Within two years Vinfast arrived at the 2018 Paris Motor Show with its first two cars. They were serious; well-adapted versions of the BMW 5 Series and X5, with input from ItalDesign on appearance and Magna Steyr (maker of the Toyota Supra and Jaguar I-Pace) for production engineering. The factory in Vietnam was almost ready.

The plan was to sell locally first. People who were trained and cared for by VinGroup facilities and shopping in Vingroup stores probably weren’t averse to the brand. The orders poured in.

Now, just three years after the launch of these petrol cars, Vinfast has killed them. It is now fully electric. There are four crossovers, the new VF6 and VF7 which were launched in Paris this year. They are under the VF8 and VF9, only slightly less new, both designed by Pininfarina. Another, the tiny VF5, isn’t far behind. So five different models.

We haven’t ridden them, but they seem, you know, fine. In that generic electric crossover way. Sales in France, Germany and the Netherlands will start early next year. They also have a 10-year warranty.

Vinfast VF6 and VF7

Now, just five years after its founding, the company is building a factory in America and looking for a location for a factory in Europe. Even if it achieves a fraction of its ambition, the progress will be astonishing.

As I’ve said many times, car making is a potential carnage. It is highly competitive, capital intensive, highly regulated and not even that profitable. You must have a very good reason for doing it. (Why would Apple, which makes a device with a margin of several hundred percent, make a car, for example, which with a bit of luck will yield a margin of about 10 percent?)

By the time that factory is built, Vượng will have put $10 billion into his automotive adventure. Given the speed of the Vinfast story so far, it probably won’t be long before we know how good this is.