Controversial moves on ride-hailing market

17:52 | 03/04/2018
After Uber sold its Southeast Asian operations to Grab, the ride-hailing market is seeing an interesting phenomenon: insiders want out, while outsiders want in.   
controversial moves on ride hailing market
Ride-hailing business in Vietnam see movement due to the leave of Uber

Uber drivers leave over crushed dreams

On March 26, all Uber drivers received a notification that after Uber officially stops its operations in Southeast Asia, they will become partners of Grab. Accordingly, drivers who want to work for Grab will have to register to have their accounts automatically transferred to Grab.

The change will take place on April 8.

However, Uber drivers are not exactly excited about joining Grab because the firm's commissions are far higher than Uber’s.

Notably, Uber drivers would need to pay 28.6 per cent of their revenue cent to Grab, including 25 per cent commission and 3.6 per cent personal income tax. The ratio is much higher than the 20-25 per cent Uber charged.

Manh, an Uber taxi driver from Hanoi, stated that since mid-2017, when Uber changed its business strategy in Vietnam and hiked commission to 23 per cent, numerous drivers had to return to work for traditional taxi firms. Manh is currently considering selling his car because Grab’s commission is too high for him.

Meanwhile, Minh, another Uber driver from Hanoi, has already sold his Hyundai i10 for VND300 million ($13,163) as he was tired of paying high commissions.

“I took up a loan to buy the car, however, after five years of working as a taxi driver for a traditional taxi firm and then for Uber, I saw that the volume of route the number of rides have been continuously decreasing and commission increasing, along with the interest of the loan. These factors make drivers’ income unstable. Thus, when Uber sold its Southeast Asian operations to Grab, I decided to sell my car because I do not want to risk working for Grab,” Minh added.

Outsiders rush to join

According to the latest movements, Phuong Trang Futa Group, a leading passenger transportation and parcel delivery company in Vietnam, invested VND2.2 trillion ($96.53 million) into developing the ride-hailing application Vivu and changed Vivu's name into Vato.

controversial moves on ride hailing market
Ride-hailing business in Vietnam see movement due to the leave of Uber

Tranh Thanh Nam, the founder of Vivu (now Vato), told Vnexpress that according to the initial plan, Vato would have been launched in May this year, however, after Uber announced that it will withdraw from Southeast Asia, Phuong Trang Group decided to launch the app in Hanoi and Ho Chi Minh City this month.

In reality, Vivu stared operations in March 2016 under the name FaceCar. It became famous for successfully mobilising $1 billion from Vietnamese overseas investors in Germany. However, the deal was not completed and FaceCar was renamed to Vivu.

According to Nam, Vato has numerous advantages compared to its competitors. Notably, drivers and customers can discuss the fare based on an initial fare issued by Vato (For example, after a customer orders a vehicle for a 5-kilometre ride, Vato will offer a fare of VND50,000, which the customer can then discuss with the driver). Besides, Vato’s base fare is VND8,500 per km, similar to the fare of Uber, however, it only charges a 20 per cent commission, 5 per cent less than Uber.

Furthermore, once customers download the Vato app, they will be able to order vehicles from other taxi firms, including Mai Linh and Vinasun.

Vato has numerous advantages compared to its competitors. Notably, drivers and customers can discuss the fare based on an initial fare issued by Vato.

Vato’s joining will make the ride-hailing market more diverse, highlighting the appearance of Vietnamese players. Notably, Viettel Telecom recently signed a comprehensive strategic cooperation agreement to purchase 30 per cent of Vietnamese transportation startup Gonow, officially joining the online ride hailing market.

Accordingly, Viettel will provide Gonow with support in developing its website, sales network, customer care system, and payment services. Founded one year ago, Gonow is a platform that connects drivers and car owners with customers to provide passenger and goods transport services, as well as car leasing.

Besides, Mai Linh Mien Bac, Thanh Cong Taxi Group, Taxi Group, The Ky Moi, Sao Thu Do, and Vinasun have also implemented their own ride hailing applications with interfaces similar to those of Uber and Grab.

Previously, in late 2016, 123Xe, another Vietnamese ride-hailing app developed by VNG, was officially launched, marking VNG’s endeavour into the ride-hailing market.

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