VinFast clarifies its European strategy

VinFast is expected to close its showrooms in Europe to shift to a more traditional franchise model.

The Vietnamese manufacturer announced a major strategic shift in its distribution model in Europe. Current showrooms and service centers are expected to close by May 9. An internal meeting held on May 2 reportedly informed 90% of employees of their layoffs, with negotiations for severance pay scheduled until May 22. Subsequently, asset liquidation and lease cancellations are planned for the second quarter.

VinFast justifies this decision by citing a strategic repositioning, indicating that its direct sales model, inspired by Tesla, is no longer suitable for current market conditions. Moving to a network of franchised dealerships should improve the customer experience and strengthen the brand’s presence in Europe, particularly in Germany and the Netherlands. While most staff will be laid off, some employees might be integrated into new business partners, although these partners have not yet been disclosed.

This repositioning is part of a broader strategy initiated in late 2023, aiming to refocus VinFast’s operations towards an indirect distribution model through dealerships. According to the company, this will grant European customers better access to products and services.

Europe is not an isolated case

This reversal recalls the difficulties faced by VinFast in other markets. In the United States, the company announced the closure of its 38 company-owned stores, also planning a shift to a franchise model. Despite these restructuring efforts, VinFast asserts its aim to build an extensive dealer network in major European cities.

This transition comes as VinFast begins deliveries of its VF 6, the second model available in Europe after the VF 8. The company’s recent financial results also partly explain this strategic review: although EV sales tripled in 2024 to reach 97,400 units—primarily in Asia—VinFast suffered a net loss of $3.18 billion despite a revenue of $1.8 billion.

VinFast’s response:

“VinFast now aims to adopt a dealership model in Germany and the Netherlands to improve customer support, expand service capabilities, and position the company for long-term success in the European market. This strategic shift in our sales and service model reflects a strengthening of our commitment to European operations; it allows us to provide better access to our customers. It aligns with our global strategy initiated at the end of 2023 and launched nationally, transitioning from the DTC (Direct Sales) model to a dealership distribution network.”

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