Automotive aftermarket – Potential turning point for distributors in the long term
• Pure car distributors such as Haxaco, Sovico, City Auto, or multi-industry distributors such as THACO, Vinfast have developed a distribution ecosystem that is ahead of the development of the automobile industry in Vietnam for more than 20 years of operation, specifically the strategies to diversify the auto segments (luxury cars, economy cars), after-sales services (spare parts replacement, vehicle maintenance, insurance/financial services), used car trading centers.• We believe that companies such as Haxaco and City Auto will continue to promote after-sales activities in the medium term based on (1) customer awareness of maintenance and the rate of cars used by the population inching slightly over the years, (2) "alpha" with other distributors in terms of customer relations, manufacturer relations, (3) the proportion of revenue of the after-sales service segment and the gross margin of Vietnamese distributors is still lower than the industry average in the world.
• We emphasized that Vietnam needs to exploit a turning point in the growth phase of the automobile market to unlock the potential of many business segments in the automobile distribution model, creating opportunities to invest in stocks such as HAX, CTF, SVC.
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