Traditional taxis struggle to compete against Grab
Updated at Monday, 25 Jun 2018, 18:43
The Hanoitimes - Vietnam`s traditional taxi firms are considering merging with each other to compete with Grab.
The rapid development of ride-hailing firms such as Grab and Uber has led traditional Vietnamese taxi firms on the downhill path. By the end of 2017, four taxi companies were dissolved and merged, according to the Ho Chi Minh City Taxi Association.
Additionally, taxi companies in the city had to cut 3,000 cars from their fleets over the past three years since Uber and Grab began operations, due to high losses.
Recently, ComfortDelGro Savico Taxi, a joint venture between Saigon General Service Corporation (Savico) and Singapore's largest taxi operator ComfortDelGro announced its plan to merge with Vinataxi, which has the third largest market share in Ho Chi Minh City.
In 2017, ComfortDelGro Savico saw a sharp decrease in revenue and after-tax profit. According to Savico's consolidated financial statement in 2017, ComfortDelGro Savico Taxi's after-tax profit stood at VND235 million (US$10,269), down from VND3.3 billion (US$144,210) in 2016 and VND7 billion (US$305,900) in 2015.
Vinataxi, meanwhile, also recorded a modest revenue in 2017 at VND48.7 billion (US$2.13 billion), equivalent to 49.8% of the year's target, posting an after-tax profit of VND1.2 billion (US$52,440) or 9.8% of the plan.
Nguyen Ho Nam, Chairman of Transport and Industry Development Investment (Tracodi), which owns 30% stake in Vinataxi, cited increasingly fierce competition in the transportation market as reason for merging, for which Vinataxi had to compete with ride-hailing firms such as Grab or Uber, not to mention traditional competitors including Vinasun or Mai Linh.
According to Tracodi, the lack of drivers has led to Vinataxi's failure in maintaining its fleet of 400 cars, leading to a slump in revenue and profit.
After the merger plan with ComfortDelgro Savico Tai, Vinataxi targets revenue of VND85 billion (US$3.74 million), and after-tax profit of VND7.7 billion (US$336,875) for this year, growing six times compared to last year..
Traditional taxi companies such as Vinasun, Mai Linh, TaxiGroup or Taxi Ba Sao are stepping up efforts to expand their respective customer bases.
Consequently, Vinasun is recruiting drivers in a bid to expand its market share. Vinasun's revenue in the first quarter reached VND490 billion (US$21.43 million) and after-tax profit of VND11.6 billion (US$507,500), down 55% and 21% year-on-year, respectively.
In early June, Ho Chi Minh City Securities Corporation (HSC) completed the purchase of 7.2 million shares, equivalent to 10.6% charter capital in Vinasun, according to the Ho Chi Minh Stock Exchange (HoSE). After the deal, HSC is currently the third-largest shareholder at Vinasun, after Vinasun Chairman Dang Phuoc Thanh with 35% and private equity investor TAEL Partners with 18.3%.
Meanwhile, Mai Linh in June announced its decision to open representative offices in Son La, Lai Chau, Tuyen Quang and Dien Bien Phu. Mai Linh's representative said its strategy is to focus on applying technology for efficient management and better service provision.