Ford distributor City Auto targets 82% net profit hike, eyes foray into EV market

City Auto, the leading distributor of Ford and Hyundai automobiles in Vietnam, is aiming for VND80 billion ($3.14 million) in net profit in 2024, a jump of 82% year-on-year.

The firm, listed on the Ho Chi Minh Stock Exchange as CTF, is targeting revenue of VND8.1 trillion ($318.2 million) this year, up 14% over the year, said its CEO Nguyen Dang Hoang at the company’s 2024 AGM on Sunday.

CTF currently has nine Ford and six Hyundai showrooms. Last year, it opened three new dealerships: Tan Thuan Ford and Hyundai Binh Tan, both in Ho Chi Minh City, and Tien Giang Ford in the southern namesake province.

This year, the company is expected to launch Ford showrooms in Tien Giang and its neighboring province, Binh Duong.

Talking about the company’s intention to step into the electric vehicle (EV) market, CTF chairman Tran Ngoc Dan said that the firm is currently studying EVs by sending survey teams to fairs and exhibitions. In the near future, the company will explore new brands, including Chinese EVs, for distribution. Starting this year, City Auto plans to begin installing EV charging stations within its network, Dan added.

Regarding its long-term plan, City Auto aims to expand its dealership network nationwide, Hoang said. He described the local automotive industry as both promising and attractive to automakers, citing the country’s abundant young population, rising disposable income, low car ownership rate, and rapidly growing infrastructure.

To reach its ambition, the firm plans a stock dividend payout of 7% (shareholders owning 100 shares will receive seven shares) for 2023. It also intends to issue 6.26 million shares, thus raising its capital base to VND957 billion ($37.59 million).

The firm also plans to issue 15 million ordinary shares via a private placement and 15 million preferred shares at a price of at least VND11,094 ($0.44) apiece in 2024-2025. The proceeds from the share issuances will be used to fulfill payment obligations to automobile, spare parts, and auxiliary suppliers.

Speaking to The Investor on the sidelines of the meeting, the City Auto chairman said that local buying power remains weak, partly because customers are waiting to see if the government agrees to halve car registration fees for locally manufactured and assembled automobiles.

Dan shared that his firm had sold all of its Ford and Hyundai inventories from last year in the first quarter of 2024. The launch of new models by carmakers is projected to drive CTF’s profit in the second half of this year, he said.

Voicing concern about the Vietnamese dong depreciation, Dan said that carmakers do not currently factor exchange rate volatility into their selling prices due to weak consumer purchasing power. However, he noted that this situation may not last long, and if carmakers begin to do so, it will negatively impact consumer purchasing power.

In 2023, City Auto sold 7,810 automobiles, up 10.4% year-on-year, but falling 22% short of its target. Its revenue jumped 12.6% to VND7.1 trillion ($279 million), missing the target by 21%. The company posted VND44 billion ($1.73 million) in net profit, down 68%, due to intense competition.