Ever-evolving strategy brings car distribution giant $1.1 bln in first 10 months

By Ngoc Diem   November 25, 2022 | 02:30 am PT
The expansion of the auto market and a breakthrough strategy have helped SVC Holdings boost revenue and profit, according to its CEO, Tran Thi Hong Bich.

SVC Holdings Joint Stock Company, which is to become a member of Tasco, has announced that the accumulated revenue for the first 10 months of the year surpassed VND28,000 billion (US$1.1 billion), an increase of 52%.

SVC Holdings is the largest shareholder, accounting for 53.68% of the shares of Saigon General Services Corporation (Savico). Savico and other members of SVC Holding maintain their position as the automobile distribution leader in Vietnam with a market share of 11.2%.

Behind those impressive financial results is a long-term strategy and constant execution as well as the contributions of dedicated people.

Tran Thi Hong Bich, CEO of SVC Holdings, shared the strategy of Savico's Board of Directors to transform SVC Holdings into an industry leader with VnExpress. Bich has 25 years of experience in the fields of automobiles, ground transportation, security, satellites, and data transformation.

Tran Thi Hong Bich, CEO of SVC Holdings. Photo by Tung Dinh

Tran Thi Hong Bich, CEO of SVC Holdings. Photo by Tung Dinh

What factors do you think have contributed to the record revenue of SVC Holdings?

The key factors were the quick recovery of auto market after two years of Covid-19 pandemic and company's adaptability to changes. The auto industry saw significant growth in the first 10 months of the year with consumption nearing 353,000 cars, experiencing a growth of 51% compared to the previous year.

With 73 showrooms nationwide, our dealers have sold more than 33,000 cars, up 54% from the same period last year and 8% higher than the results of 2021. Most of the car brands distributed in our system saw strong growth over the same period, including Volvo, which is holding firmly the third-place position in Vietnam's market share for luxury vehicles. This trend will continue until the end of the year when more cars and new models are delivered to Vietnam.

Aside from the positive developments in the market, what else has SVC Holdings done to ensure a quick recovery?

At the beginning of 2022, we set out five goals. The first is to deliver 40,000 cars, accumulating to VND35,000 billion this year, aiming for a 6% increase. We also intend to open 10 new car dealerships, of which 8 have already been put into operation. Additionally, we are negotiating with other auto brands to expand our product offerings in Vietnam.

The company also develops an ecosystem for the automotive industry, which includes financial services, insurance, and value-added products. We have launched Carpla, an online marketplace that connects buyers and sellers of used vehicles. It combines the massive offline Auto Mall and Megamall systems.

We also have a range of activities to improve operational efficiency and continue to develop our roadmap for digital transformation.

What are the long-term strategies of SVC Holdings?

Vietnam is a developing country with a rapid rate of economic expansion, and as a result, consumer demand for cars is rising. The car ownership rate of Vietnamese people is roughly 45 cars per 1,000 people, lower than the rates in nearby countries such as Thailand and China, at 280 and 219 cars per 1000 people, respectively.

Therefore, the potential in Vietnam's car market is still substantial. According to the Ministry of Industry and Trade, approximately 800,000 to 900,000 new cars will be sold by 2025, which suggests an annual growth rate of 16-17%. By 2028, the market size is estimated to reach US$30 billion.

With such a promising market, we have also made plans to expand our system to consist of 120 dealerships by 2026, to maintain our top spot in the automotive distribution area. We also aim to become the leading distributor of used cars in Vietnam via our proprietary Carpla and Savico's online and offline platforms which connect buyers and sellers through reputable and transparent car inspection services.

Our company is making plans to introduce new electric vehicle brands to Vietnam market, to meet the rising demand for green cars.

A showroom in the Savico system. Photo by Sovico

A showroom in the Savico system. Photo by Sovico

How will SVC Holdings achieve its objective of nearly doubling the number of dealerships by 2026?

We intend to build a series of auto malls in 20 major cities with 3-5 car brands at each location, with offerings including passenger cars, high-end automobiles, new cars, used cars, and all-around service for cars. These auto malls will be designed to integrate into the local shopping mall, and shopping center. We also plan to introduce new car brands to Vietnam to diversify our market offering.

In your opinion, what challenges must be overcome when bringing a new automobile brand to Vietnam market?

Building consumer confidence in product quality and reliability is one of the most challenging aspects of launching a new automotive brand. Business operations will also face difficulties if new automobile manufacturers' product policies are inappropriate for Vietnam.

As the top distributor of motor vehicles in Vietnam for 12 major auto brands, we are confident that we can meet the demand of our customers. We also benefit from our strategic relationships with many major automakers because of our extensive distribution network and track record.

As you just mentioned, SVC Holdings has recently entered the used car market. How does the company evaluate this opportunity?

The used car market in Vietnam still has room for growth. The ratio of used cars sold to new cars is only around 0.4, much lower compared to other Southeast Asian countries such as Thailand (2.4), Indonesia (1.5), and Malaysia (2.0). This segment is estimated to grow 24% annually, with a market value of up to US$18 billion by 2028.

This sector, however, remains highly fragmented with many businesses. SVC Holdings is in a good position to take advantage of this opportunity since we have a lot of experience in new car distribution, after-sales service facilities, and ability to verify used cars with high-quality technical staff from Savico dealers. When exchanging used automobiles at Megamalls, customers can feel confident doing so both offline and via online applications. Trading in used cars also helps to complete our auto ecosystem so that we can provide all car-related services to our customers.

Some car models distributed by Savico. Photo by Savico

Some car models distributed by Savico. Photo by Savico

How has the company positioned itself in the electric vehicle segment?

The auto industry is making strong transitions to clean energy with a global commitment to reduce carbon emissions and minimize the effects of climate change. Many major automakers are introducing new electric vehicle models. In addition, many pure electric vehicle manufacturers have made aggressive business plans to enter Vietnam market.

SVC Holdings has identified many partners for exclusive distribution of major electric vehicle brands in Vietnam.

What are the factors that make SVC Holdings different, and why do you think it can become the top car service company as expected?

We are building a comprehensive ecosystem, reducing intermediaries, and providing a full range of services directly to customers. They will begin by learning about cars by joining the online automotive community on the Carpla platform or visiting auto malls. Customers can choose from 12 different automobile brands at Savico auto dealerships across the country.

Customers can take delivery of their car at home, and receive financing, insurance, and other value-added services. They can rely on certified professionals for maintenance and repairs. Customers can either use the mobile repair service provided by their local dealership or rent a replacement vehicle while their car is being serviced.

When customers want to exchange cars, Carpla will help connect buyers and sellers so that the car is appraised by a network of authorized dealers with transparent and accurate information. A new cycle begins when a customer buys another car and stays attached to the SVC Holdings ecosystem.

SVC Holdings will gain new values from joining the Tasco system, including financial, insurance, and automobile-related intelligent traffic. With 73 showrooms nationwide and more than 7,000 highly skilled employees, it has the strongest distribution capability and scale in Vietnam with more than 40 years of operation.

Can you share more about SVC Holdings' plan to develop elite human resources?

Our R&D department currently has 10 members, including domestic and foreign experts with decades of experience working for famous automakers around the world. Among them are Dominique Crappier, former Director of Volvo Car Corporation in Sweden and Keno Kato, Senior Advisor of Mitsubishi Motor Corporation and former Global Director of Nissan.

We believe that the R&D department and Savico's senior management system will help SVC Holdings become well-known on the global automobile distribution map. In addition, SVC Holdings and its parent company, Tasco, provide many training programs, including leadership training, to upgrade skills of employees within organizations.

The senior staff are all prominent names in the industry, coming from many countries. How can the company attract and retain talent?

We all share the same goal of making SVC Holdings a market leader in the automotive service industry. The greater the challenge, the greater the motivation for our entire workforce. In addition to offering competitive remuneration, SVC Holdings also creates an environment for talent to develop within the company's development plan. Good seniors always face new challenges and responsibilities to make their work interesting. The company also focuses on training and building programs for employees to improve themselves.

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