The competition in the Vietnamese US$1.7 billion ride-hailing market is reviving up with the participation of more players after several months under the dominance of giant Grab.
With a population of over 93 million and a fast-growing transportation service market, Vietnam has become a lucrative place not only for local enterprises but also foreign ride-hailing companies. Never have Vietnamese customers had such a diverse range of car-hailing options.
After the departure of Uber, many ride-hailing applications such as Go-Viet, VATO, Aber and FastGo have been developed in the market. Among them, Go-Viet under Indonesia-based Go-Jek is considered as one of the most competent rivals of Grab. While Go-Jek is being valued at US$5 billion, Grab is assessed at US$6 billion.
With its US$500 million expansion plan into Southeast Asian countries, Go-Viet has recently entered the market with many shocking promotion programs to attract both passengers and drivers. Accordingly, Go-Viet has offered the deal of ‘VND5,000 (21 US cents) for all trips under 8km (currently changed to VND8,000)’.
Not only applying bold promotion for customers, Go-Viet has also released attractive policies for drivers such as providing free uniforms including helmets, jackets for new drivers; not deducting interest from newly registered drivers in six months and giving additional fee support for drivers in each trip.
For instance, with trips under 8km, Go-Viet will support the driver with VND25,000 (US$1.07) to ensure the minimum fare per ride reaches VND30,000 (US$1.29).
The programs have helped the newcomer lure many passengers and drivers despite being newly launched. According to the recent information shared by Go-Jek Chairman Andre Soelistyo, Go-Viet has currently held 10 percent of the ride hailing market in Ho Chi Minh City.
Under the overheated competition from the newcomer, Grab has recently also forced to roll out counter-measures to gain market shares, announcing to increasingly offer new promotions for both customers and drivers using its services.
To compete with Go-Viet’s price strategy of VND5,000 for all trips under 8km, Grab has immediately offered similar deal for GrabBike when charging only VND2,000 for all trips under 8km and giving free pick-up for all trips under 5km in the central districts of Ho Chi Minh City.
In addition, Grab has also announced the policy of ‘Get back 5 percent of revenue per week’ applying to GrabBike, GrabBike Premium and GrabExpress partners in Ho Chi Minh City. With all qualified Grab’s drivers, they will only have to pay 15 percent of commission for Grab, prior to this deal, 20 percent interest was deducted from driver’s revenue.
After Uber left in May this year, Grab’s rates have increased, especially during peak hours, holidays or during bad weather, according to many passengers.
Grab drivers have also complained about high commission rates, nearly 20 percent for veteran drivers, and more than 28 percent for new drivers.
Now, though it is unclear what will be Go-Viet’s strategy in Vietnam in the coming time, the appearance of a competent rival for Grab brings high hopes for a healthy competitive market, which benefits both customers and drivers.
Nguyen Xuan Thuy of the Division of Transport under the Ministry of Transport, said that what Vietnamese passengers need is good service at a reasonable price.
The more competitive the market is, the more customers will benefit, Thuy said.
Economist Bui Quang Tin said local ride-hailing apps should take advantage of Uber’s exit to expand their market share and offer more choices for local commuters, adding that those who provide the best service will be the winners.