Vingroup just reported a loss of more than $1 billion before tax in its gasoline car production last year because of low vehicle sales, according to Vingroup’s financial report released last week.
According to this report, Vingroup for the first time reported an accumulated loss after tax of VND7.5 trillion ($322 million) in 2021, which was announced by the state-controlled media because the group has sponsored trillions of dong to fight the COVID-19 epidemic and completely turned to electric vehicle production.
In 2021, Vingroup has sponsored VND6.1 trillion for COVID-19 prevention activities and other sponsorship activities. At the same time, the group also decided to stop producing gasoline cars from the end of 2022 to focus resources on electric vehicles.
The decision to discontinue car production resulted in Vingroup recording an expense related to accelerated depreciation of unused assets and fees paid to suppliers as a result of contract termination.
According to the report, the revenue of VinFast, Vingroup’s gasoline car production arm, was VND17.263 trillion, accounting for 14% of total revenue, and recorded a pre-tax loss of VND23.9 5 trillion, equivalent to about $1 billion.
In 2021, VinFast sold over 35,700 cars to customers. This number of 2020 is 24,100 vehicles.
At the end of last year, VinFast launched its electric car line in the US market with the immediate goal of targeting the electric vehicle market in the US, Canada, and Europe.
In a recent interview with the domestic media, Vingroup’s Chairman – Mr. Pham Nhat Vuong – said that VinFast is expected to suffer a loss in the first five years, is now more than half of the way, and if it follows the plan in two years, it will be profitable. In the international market, the Vietnamese market still makes up for losses because it has to bear the cost of building infrastructure for electric vehicles.
VinFast’s decision to quit producing gasoline cars has been criticized by many car buyers in Vietnam.
The announcement to stop producing gasoline cars after only three years since the first VinFast car was released made many people in Vietnam lose confidence in the company, and said that “if I had known it would stop production in advance, I wouldn’t have bought its car.”
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