Despite optimistic business prospects, GM still agreed to be "acquired"

General Motors (GM) has just signed a strategic partnership agreement with VinFast, a subsidiary of leading Vietnamese corporation, Vingroup . As part of the agreement, VinFast will become the exclusive distributor for the Chevrolet brand in Vietnam.

At the same time VinFast will assume ownership of the GM Hanoi factory, and will implement a significant investment program to build an all-new, global small car licensed from GM and manufactured and sold under the VinFast brand.

It is expected that by the end of this year, the transfer of GM Vietnam's operations, including the plant in Hanoi city, the authorized dealer network and human resources of the company will be completed.

GM Vietnam, previously known as VIDAMCO was established in 1993 by the joint venture of Daewoo Motor (Korea) and the 7893 Engineering Union of the Ministry of Defense and the its operation duration would last 30 years.

In 2011, VIDAMCO officially changed its name to GM Vietnam, a member of GM Global. Currently, the assembly plant of GM Vietnam is located in Thanh Tri district, Hanoi city on an area of 48,044 square metres together with the office area of 26,532 square metres.

GM Vietnam product lines including Spark, Aveo, Cruze, Orlando, Captiva, Trailblazer, Colorado are manufactured under the Chevrolet brand.

According to the report of GM Vietnam, the total value of fixed assets invested in the factory was about $29 million, however by 2016, it had been depreciated by $25 million.

According to the report in 2016, GM Vietnam gained over $140 million in revenue and a post-tax profit of $9 million, an increase of 51 per cent.

Bases on the data of Vietnam Automobile Manufacturers' Association, in 2016 the company sold more than 9,700 vehicles, accounting for 3.5 per cent of market share.

By 2017, Chevrolet sales continued rising by 8.5 per cent, reaching 10,576 units, representing 4.2 per cent of the car market share in Vietnam.

Chevrolet's best-selling model is the Colorado pickup truck, specifically, 3,082 units were sold in 2017 ranking second in the pickup truck line in the market, just behind the Ford Ranger, also known as the king of the pickup truck line.

Despite the market share of Chevrolet being only about one fifth of Toyota, Thaco and equivalent to brands like Honda, Nissan, Suzuki, etc., GM's car sales have been growing well in recent years thanks to the widespread distribution of GM with 22 dealers nationwide.

Particularly, there are eight distributors in the North, three in the Central Coast and 11 in the South, in which, Ho Chi Minh City has nine distributors.

In addition to the assembly plant of GM Vietnam, the widespread distribution system of GM will be a crucial element helping VinFast form a sales and service network in the field of automobile production that it recently joined.