Vietnam's Ford distributor City Auto pays first cash dividends in 6 years, joins EV sale

City Auto, a leading distributor of Ford and Hyundai automobiles in Vietnam, plans a cash dividend payout of 5% for 2025, equivalent to nearly VND48 billion ($1.85 million), marking its first since 2018.

Following this payout, the company will retain VND9.3 billion ($357,995) in undistributed earnings, its board of directors said at the 2025 AGM held in Ho Chi Minh City on Tuesday.

In its 2025 business plan submitted to the meeting, the company targets sales of 9,200 vehicles and net revenue of VND8.6 trillion ($331 million) this year, both up 5% from 2024.

It also aims to earn a net profit to VND100.8 billion ($3.88 million), a 110% surge year-on-year. Along with the growth targets, the company plans to raise its cash dividend payout from 5% to 10%.

In Q1/2025, despite strong revenue growth, profitability declined. Net revenue reached over VND2 trillion ($77 million), up 33.6% year-on-year, while net profit dropped by 62.3% to only VND2.9 billion ($111,632). This result raised shareholder concerns about the company’s ability to meet its full-year targets.

In response, Tran Quang Tri, board member and deputy CEO, assured shareholders that the business plan is well-founded and has been thoroughly deliberated by the executive board.

He noted that the auto industry typically sees lower profits in the first two quarters, with Q3 and Q4 being peak periods. He also highlighted that car sales are not the sole revenue stream - dealerships also earn from manufacturer incentives and other channels.

In Q3 and Q4, additional income from OEM (Original Equipment Manufacturer) partnerships is expected, Tri added.

Given the slim profit margins from new vehicle sales, City Auto is placing greater emphasis on alternative income streams in 2025, such as accessories, insurance, financing, and used vehicles. The company has already begun selling used cars at multiple showrooms.

"In the first two quarters, our vehicle and service revenue are on track. Reaching VND100 billion ($3.85 million) in net profit this year is achievable," the deputy CEO stated.

Chairman Tran Ngoc Dan noted that sales of new cars remain challenging and typically only cover operating costs. In 2024, the company’s profit was sustained by its service segment such as after-sales support, accessories, and financial services.

All showrooms in the network have inked joint service agreements with banks or insurance providers, allowing City Auto to secure highest commission rates.

City Auto is also eyeing the electric vehicle (EV) segment, which the leadership identifies as a key growth trend.

The company has started collaborating with Vietnamese EV manufacturer VinFast, reaching agreements to open three VinFast dealerships - one already launched in Tan Binh district, Ho Chi Minh City, the second underway, and the third expected by September. These will provide a foundation for expanded after-sales services.

City Auto is a leading distributor for Ford, Hyundai, and Volkswagen in Vietnam. By the end of 2024, it operated 17 showrooms, up four from the previous year. They include nine for Ford, five for Hyundai, and three for Volkswagen. In 2025, it plans to further expand its network by identifying new locations.

In 2024, City Auto sold 8,754 vehicles, exceeding the target by 8% and rising 12% year-on-year. Revenue reached over VND8.17 trillion ($314.5 million), 1% above the goal and up 15% from 2023.

However, net profit came in at only VND48 billion ($1.85 million), achieving just 60% of the planned figure and up 9% year-on-year.

The company attributed its sales growth to the launch of new Ford showrooms in Tan Thuan (HCMC), Tien Giang, and Di An (Binh Duong), as well as its acquisition of a 99% stake in VW Tan Thuan - a 3S dealer for Volkswagen.

The board of directors also proposed scrapping the previously approved 2024 private placement and convertible preferred share offering.

A new plan is being presented to issue 15 million privately placed shares and 15 million convertible preferred shares, at no less than the company's 2024 year-end book value of VND10,854 ($0.42) per share. The proceeds will be used to supplement working capital.

The leadership emphasized the necessity of raising capital, both for general growth and for potential M&A opportunities.

Chairman Dan stated that the goal is to increase the company’s market capitalization to over VND5 trillion ($192.47 million).