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Ride-hailing market in Vietnam: Dominance of foreign companies

Ride-hailing market in Vietnam: Dominance of foreign companies

Wednesday 05, 10 2022
The growth rate of the online ride-hailing market is the second highest in Vietnam, after the retail e-commerce market. However, the majority of the market belongs to foreign enterprises.

1% market share for Vietnamese companies

About a decade ago, Vietnamese hardly ever heard of the term “ride-hailing”. The most popular means of transportation were taxis. Motorcycle taxis existed but were not booked through apps. They are informal motorcycle taxis that people can easily find gathered in public places or on the sidewalk.


On February 2014, Grab entered Vietnam, under the name GrabTaxi. Grab was, at the time, an application to assist with connecting to taxi companies. Hence, they did not make an impression on the Vietnamese.

4 months later, Uber joined the fray, and the race in the rail-hailing market started.

The two big names from Singapore and America began competing with traditional taxis in Vietnam, then pressed on to the market of motorcycle taxis, shipping, food shipping, etc. They gradually took over the market, and completely changed the habit of Vietnamese customers. A couple of years after their first steps in the Vietnamese market, almost all Vietnamese had Grab and Uber applications installed on their mobiles.

According to data from the Department of Transportation (Ministry of Transport), after 7 years of development, the ride-hailing market in Vietnam has witnessed the participation of 20 different platforms. Up to now, there have been about 67,000 taxis and 90,000 contract cars registered for business.

With a revenue of about 2.4 billion USD in 2021 and an average growth rate of about 30-35% per year from 2015 until now, the ride-hailing market has the second highest growth rate in Vietnam, just behind e-commerce retail.

According to Statista's data in 2020, the total market share of the three largest enterprises in the market, including Grab, Gojek, and Be Group, has reached nearly 99%. That means the remaining 17 "made in Vietnam" ride-hailing apps share just over 1% of the market share.

After Grab acquired Uber in the Southeast Asia market in 2018, some Vietnamese enterprises tried to enter the ride-hailing sector. Notable names included Vato, FastGo, Go-Ixe, Aber, etc., all failed to maintain any significant impression on the customers.

The situation shifted when Gojek (previously GoViet) started penetrating the market, announcing a result of 35% market share after 6 weeks of introducing the motorcycle-hailing service. While Grab and Gojek were in a heated competition, “be” – an application of Be Group, was established, and 9 months after, was assessed as the fastest growing start-up in Asia, claiming to have occupied about 30% of the market.

VietnamCredit - Gojek

Nevertheless, according to a survey by Q&Me published in June 2021, based on the number of customers using the two-wheeler service in Vietnam, Grab held about 60% of the market share, Gojek accounted for 19%, and Be 18%. For cars, Grab's market share is overwhelming with 66%, Be accounts for 22%, and the rest is divided among other applications.

Can Vietnamese companies gain the upper hand?

A co-founder of a technology start-up in Ho Chi Minh City stated that Vietnam’s ride-hailing companies would find it impossible to gain any upper hand on foreign competitors if the Vietnamese ones aim to take over the market share.

The biggest problem for Vietnam’s companies is spending on investment. Unlike foreign investors, Vietnamese companies cannot and do not accept that their investment may take up to 10 years to make any profit.

In addition, foreign companies prepare a plan on a much larger scale. From the beginning, Grab, Uber, and Gojek have determined that the ride-hailing market would be only a stepping stone to building up an ecosystem of other services, such as food ordering, shipping, payment, etc. These companies have occupied the market in many services long before any Vietnamese companies could make a move.

VietnamCredit - foreign companie

Another disadvantage for Vietnam’s ride-hailing companies is that their applications are weaker than those of foreign companies in terms of technology. Grab and Gojek has better technology solutions and have the advantage of attracting large investment funds to invest more heavily in the product. Their positioning is better, and the features are better.

In general, it will be hard for Vietnam’s ride-hailing companies to compete with foreign ones.

Ride-hailing in Vietnam is still in favor compared to traditional taxis. Online ride-hailing platforms in Vietnam are facing stiff competition for finance, service quality, experience, utility, and the trend of ecosystem expansion. Mr. Nguyen Quang Dong, Director of the Institute for Policy Studies and Media Development (IPS), assessed that the ride-hailing market in Vietnam is developing healthily. The more companies participate, the more economic benefits there will be. Foreign enterprises will stimulate domestic ones to compete, explore and develop and operate more seriously, with better quality, benefitting users in turn.



Compiled by VietnamCredit

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