LVMH Holdings "Vietnam Subsidiary Consolidated into Group Due to Improved Performance"

[Asia Economy Reporter Hyunseok Yoo] LVMC Holdings announced on the 6th that it has decided to incorporate Vietnam-based Daehan Motors as a subsidiary.

Last year, the group excluded it from consolidation to focus on profit-oriented management and improving the financial structure. The company explained that the decision to reintegrate it after one year was due to the improved performance trend.

Despite the COVID-19 pandemic last year, Daehan Motors in Vietnam achieved sales of 1,960 units and revenue of 21.5 billion KRW, driven by strong mini-truck sales and recovering consumer sentiment in Vietnam. With Daehan Motors turning profitable this year, the decision to incorporate it as a subsidiary for LVMC Holdings' consolidated results starting from the second quarter was made.

The consolidation of the Vietnam subsidiary is expected to have a positive impact on LVMC Holdings' performance. According to the company, the sales and revenue plans for 2021 are 3,100 units and 34 billion KRW, respectively, representing a 63% growth compared to the previous year. Especially, sales from January to April reached 906 units, a 206% increase year-on-year. The company expects the 2021 business plan to be smoothly achieved.

In the first quarter of this year, 542 units of the small truck 'Tera100' were sold, a 55.7% increase compared to the same period last year. Additionally, due to the product mix, the average selling price increased by 9.3% during the same period, indicating simultaneous improvement in sales volume and profitability, according to the company.

The Vietnam market for small trucks under 1 ton is dominated by the top four companies, which account for 90% of total sales, as most global automakers do not have a lineup in this segment. The top two market shares belong to the Japanese brand SUZUKI and the Vietnamese brand THACO.

Daehan Motors' TERACO ranked third in sales for the first time in the first quarter, surpassing the Vietnamese brand DONGBEN. Since its first market entry in December 2018, it has gradually increased its market share to 13% within two years.

The mini-truck showing strong sales at Daehan Motors is a collaborative model with Changan Automobile, the second-largest car manufacturer in China. It boasts competitive advantages such as engine power, lightweight body, spacious cargo area, and various convenience features. This is also why it is expanding its market share by surpassing local Vietnamese brands.

An LVMC Holdings official said, "The size of the Vietnam automobile market has rapidly grown from 220,000 units in 2017 to over 330,000 units last year," adding, "New products for the Light Truck market ranging from 1.5 tons to 4 tons, such as TERA150 in the second quarter and TERA180, TARA350L in the third quarter, are scheduled for release." He continued, "We plan to expand local production models and continue to grow the Light Truck market along with mini-trucks."