Mitsui & Co: Catalyzing Tasco Auto’s New Automotive Ambitions?

In late May 2024, at the first annual general meeting of shareholders after completing the acquisition of Tasco Auto, Tasco introduced a new strategy to enhance its position in the automotive industry. With the largest automobile distribution network in Vietnam, comprising nearly 90 showrooms and 14 car brands, the company aims to move upstream with a project to build an automobile assembly plant (CKD) in collaboration with a partner from the top 10 global OEM manufacturers.

For this project, Tasco set a timeline for implementation as early as 2024 and targets to launch products by 2025. “The partners we choose must be in the top 10 global OEMs, have a fast growth rate, possess advanced technology, and, most importantly, offer a wide range of products. This is especially crucial given the dynamic nature of the automotive industry, which constantly embraces new trends. Our partners’ products must always keep up with these trends,” said Pham Van Dung, Chairman of Tasco Auto.

Accordingly, Tasco is planning to join the global supply chain by building a system of suppliers capable of serving exports, particularly targeting markets where Vietnam has preferential tax treatments.

The Chairman of Tasco Auto also affirmed that the company would only participate in assembling products under the partner’s brand, aligning with its strengths. This direction mirrors the strategies of prominent conglomerates such as THACO Group and Thanh Cong Group, which have achieved remarkable success and leadership in automobile assembly in Vietnam.

Global conglomerate seeks partnerships with industry leaders

Just two months after the shareholders’ meeting, Tasco Auto executed two significant transactions to reinforce its development strategy. The first was the acquisition of Sweden Auto, the importer and distributor of Volvo cars in Vietnam. Subsequently, Tasco Auto officially announced that Mitsui & Co., a Japanese conglomerate, had become its strategic shareholder after a thorough evaluation process. The investment from Mitsui & Co. was initially disbursed on July 31, 2024, paving the way for numerous collaborative development plans in the future.

Mitsui & Co. is a conglomerate with a diverse business portfolio. Its Mobility Unit, encompassing automobile and transportation, is one of its key business segments, alongside mining, energy and petrochemicals, iron and steel, and food.

Mitsui & Co.’s investment activities focus on seeking, developing, and expanding its business through global partnerships with trusted partners, including leading companies worldwide. They combine geographic and industry strengths to create sustainable long-term value and drive growth and development for all stakeholders.

Mitsui’s investment appetite leans towards projects with a long-term vision, while also supporting the development and expansion of partner companies. Despite its diverse investment portfolio across various industries, Mitsui consistently chooses the most promising partners and sectors.

For instance, in Vietnam, before partnering with the largest automobile distribution system, Tasco Auto, Mitsui had already become a strategic partner of Minh Phu, the country’s largest shrimp exporter (holding 35% of its shares), and invested in the gas project Lot B-O Mon, one of the most prospective oil and gas projects today.

The Vietnamese automotive industry itself is a high-growth sector, bolstered by multiple long-term drivers, including the expanding middle class. Additionally, a series of supportive policies, such as the development of highways, infrastructure upgrades, and urban planning expansions into peripheral areas and satellite cities, further enhance the industry’s prospects.

Investor with extensive experience in the automotive value chain

In the current context, the strategic collaboration between Tasco and Mitsui is propelled by a shared vision to seize long-term growth opportunities in the automotive industry. This partnership maximizes Tasco’s strengths in automotive services in Vietnam and leverages Mitsui’s international experience, global network, and robust financial capabilities. This synergy not only benefits both parties but also unlocks numerous development opportunities for the Vietnamese automotive industry.

In North America, Mitsui is a strategic partner of Penske, one of the world’s largest automobile distribution groups, with over 3,200 branches and 30 car brands. Mitsui has also invested in PAG, a Penske subsidiary specializing in automobile retail distribution, since 2001, and established the joint venture Penske Truck Leasing (PTL) in 2015, venturing into the truck rental, transportation, and logistics services sector on a global scale.

In Southeast Asia, Mitsui & Co. is a major shareholder of Perodua, Malaysia’s largest domestic carmaker. In the Philippines, Mitsui has been present in the Toyota Motor Philippines joint venture since 1998.

Mitsui’s investment portfolio demonstrates its successful collaborations with numerous global partners across automobile distribution and assembly production. This aligns with the integrated automotive value chain that Tasco is striving to establish.

Beyond providing capital, Mitsui’s extensive experience in the global automotive value chain can act as a “catalyst,” enabling Tasco to solidify its leadership in its existing car distribution business and propel its plans for the vehicle assembly project.

With Mitsui’s partnership, Tasco’s negotiating power with automobile manufacturers and suppliers will significantly increase compared to operating independently. Additionally, given Tasco’s ambition to venture into exports, Mitsui & Co.’s stature as one of the world’s leading global trading conglomerates offers numerous advantages.

Both Mitsui and Tasco pursue the development of an integrated value chain serving the automotive industry. Therefore, the collaboration between these two industry leaders is perceived as more than just a conventional investment or business endeavor. It is expected to propel the growth of the automotive market, increase car ownership rates in Vietnam, which are currently low but exhibit high growth potential.