The Great Comeback: Can GAC Revive its Fortune in Vietnam with its ‘Hard-to-Sell’ Cars?

The Chinese automotive invasion of Vietnam is set to continue in August with the arrival of GAC, a brand under the Guangzhou Automobile Group. GAC is set to introduce two gasoline-powered vehicles to the market: the GS8 SUV and the large MPV, the M8.

GAC’s entry strategy into Vietnam differs from its Chinese counterparts. According to TC Services, the distributor of GAC vehicles in Vietnam, the GAC GS8 and GAC M8 will be the brand’s first models introduced to Vietnamese customers. The GAC GS8 is a mid-size SUV positioned in the same segment as established competitors such as the Ford Everest, Hyundai Santa Fe, Toyota Fortuner, Kia Sorento, and Mazda CX-8. Meanwhile, the GAC M8 will go up against the Kia Carnival and Volkswagen Viloran in the large MPV segment.

The GAC M8 is one of the brand’s first models introduced to the Vietnamese market. Image source: TC Services.

GAC’s initial focus on higher-segment vehicles sets it apart from the general trend of Chinese automakers entering Vietnam. Most of its competitors have targeted the lower segments with more affordable price points.

For instance, MG re-entered Vietnam in 2020 with the MG ZS and MG HS, positioned in the small SUV and compact SUV segments, respectively. They later introduced the MG5, a compact sedan with a competitive price tag. Beijing Automotive Industry Corporation (BAIC) also entered the market in 2020 with the Beijing X7, a compact SUV priced below VND 700 million at launch. They followed up with the U5 Plus, a competitively priced compact sedan.

Beijing previously introduced the X7 and U5 Plus in the Vietnamese market. Image source: Hoang Tuan.

BYD, another Chinese automaker, recently introduced its first three electric vehicles to Vietnam: the BYD Dolphin, BYD Atto 3, and BYD Seal. Only the BYD Seal is positioned in the mid-size sedan segment, while the Dolphin and Atto 3 target the small hatchback and small SUV segments, respectively.

Overall, most Chinese automakers entering the Vietnamese market in recent times have focused on affordable, mass-market segments with price points around the VND 700-800 million mark. Some exceptions include Lynk & Co with their SUV 09 (priced from VND 2.199 billion) and the Haval H6, a compact SUV priced at nearly VND 1.1 billion at launch.

GAC’s Pricing Strategy in Question

GAC’s decision to introduce the GS8 and M8 as their first models in Vietnam may pose a challenge when it comes to pricing. Their competitors in the respective segments are priced around VND 1 billion, and GAC, being a relatively unknown Chinese brand in Vietnam, may struggle to justify a higher price point.

Competing models in the GS8’s segment are priced around VND 1 billion. Image source: TC Services.

BYD also faced a similar dilemma and opted for a cautious approach by conducting test drives and gathering feedback before setting their prices. While their final pricing may not have satisfied all customers, it was considered a reasonable strategy given the current import sources of their vehicles.

Chery, another Chinese brand, has been hesitant to enter the market, repeatedly postponing their launch and price announcements despite hosting test drives and promotional events. They plan to introduce the Omoda C5, a compact SUV, followed by the Jaecoo J7, a compact SUV with a hybrid powertrain similar to the Honda CR-V e:HEV RS.

GAC may face similar challenges in pricing their vehicles competitively without undermining the value of their technologically advanced offerings. Their success in the Vietnamese market will largely depend on their ability to strike a balance between pricing and the features offered.

If GAC can find a sweet spot with their pricing strategy, they may consider introducing additional models in lower segments. One such model could be the GS3 ENZOOM, a compact SUV that is set to be assembled in Malaysia by the Tan Chong Group with an investment of VND 12 million USD. GAC’s initial moves in Vietnam seem to be more about testing the waters rather than an immediate push for sales volume. However, competitive pricing will be crucial to attract a wider range of customers and avoid a sluggish start followed by a desperate price war.