The Ultimate Guide to the Thriving Ride-Hailing Market

Intense Competition

The scale of Vietnam’s ride-hailing market is estimated at 880 million USD in 2024, reflecting a growth of approximately 160 million USD from 2023. The market is projected to expand at a rate of nearly 20% annually, equivalent to 200 million USD per year.

While the market size continues to increase, the growth of certain traditional ride-hailing services has stagnated and even declined significantly. For instance, before the COVID-19 pandemic, Vinasun maintained a fleet of 6,000-7,000 vehicles with a substantial customer base. However, due to the subsequent decrease in demand, their fleet size has considerably reduced. This trend is not unique to Vinasun, as many other taxi companies have downsized their fleets by 50-70% compared to pre-pandemic levels. Even ride-sharing giants like Grab have witnessed a reduction of tens of thousands of vehicles on their platform.

Mr. Ta Long Hy, Chairman of the Ho Chi Minh City Taxi Association, acknowledges the significant potential and ongoing recovery of the ride-hailing market. However, he emphasizes the need for substantial investments to meet the escalating demands of customers. As an illustration, he mentions that Taxi Mai Linh has signed a contract to purchase nearly 10,000 new vehicles over the next five years, with over 2,000 vehicles expected to be delivered this year. Vinasun, another prominent player in the industry, is investing in 2,000 new hybrid vehicles, 800-900 of which will be operational in 2024, while the remaining will be allocated for 2025.

Despite not being a large taxi company, Dong Thuy Co., Ltd. (operating under the brand name Lado Taxi) has signed an agreement to purchase and lease an additional 2,500 VinFast electric cars. Prior to this, the company invested in 500 electric vehicles to replace gasoline-powered cars operating in Lam Dong, Binh Dinh, Binh Thuan, and Dong Nai provinces.

Taxi companies such as Bach Dai Dung, En Vang, Xanh Sapa, and Sun Taxi have also made significant investments in electric vehicles to provide taxi and factory worker transportation services. Notably, Sun Taxi made headlines last year with the purchase of 3,000 VF5 Plus electric cars to gradually replace gasoline-powered vehicles in provinces like Quang Binh, Hue, Quang Nam, Quang Ngai, Binh Dinh, Khanh Hoa, and Binh Thuan.

The substantial investments made by these taxi companies, despite financial challenges, underscore the market’s positive trajectory and the surge in demand for transportation services, particularly for student transportation and designated driving services for customers concerned about blood alcohol levels. Many companies have confirmed their strategic investments as a springboard for accelerated growth in the coming years.

Diversifying Services

Recognizing the market’s potential for further expansion, Mr. Vo Quoc Binh, representing Togo Group Joint Stock Company (Ho Chi Minh City), shared that the company has signed a contract to purchase over 2,000 electric vehicles for their ride-hailing services. As per the plan, they will receive 500 vehicles this year and have already taken delivery of more than 100. Additionally, the company has signed a memorandum of understanding with VinFast to purchase 1,000 VF 3 cars.

Mr. Vo Quoc Binh elaborated that Togo Group Joint Stock Company will utilize the VinFast VF 3 electric cars to provide complimentary transportation services for individuals who have been drinking in Ho Chi Minh City. Furthermore, the company offers subscription-based transportation services for students, office workers, factory workers, and individuals, charging 2.89 million VND per person per month for a round trip of 16 kilometers.

“While the traditional taxi and ride-sharing market still has room for growth, we have chosen to focus on a different segment. With high operational intensity, vehicles tend to deteriorate rapidly, compromising quality. Additionally, there have been issues with drivers competing for customers and driving recklessly. Recognizing the growing demand for personalized services, we have opted for a subscription-based model tailored to individuals,” Mr. Binh explained.

Tran Anh Tung, Master of Science in Management from the University of Economics and Finance in Ho Chi Minh City, emphasized the need for taxi companies to restructure their business models and introduce compelling services to thrive in this competitive market. This could include offering higher discounts and lower prices for customers booking through applications, as well as improving the overall service quality and driver attitude.