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Vietnam Ride-Hailing App Market in 2023

By September 26, 2023April 11th, 2024No Comments

Transportation is one of the most rapidly developing sectors in Vietnam, and with the development of applications on smartphones in the context of the fourth Industrial Revolution, “ride-hailing apps” have become popular with people. Those apps, with a user-friendly platform, which includes extra convenience, variety of payment methods, complete door-to-door service, reduced waiting time, have redefined the individual public transportation industry.

The ride-hailing market in Vietnam is growing rapidly, driven by many key factors with major players. This article will discuss the current rise of the ride-hailing apps market in Vietnam. It will examine the factors that have contributed to the growth, the key trends of the market and future challenges that ride-hailing companies face.

ride-hailing app market in Vietnam

1. What is a Ride-Hailing App?

A ride-hailing app is a mobile application that allows users to request and pay for a ride from a private driver. Ride-hailing apps have become increasingly popular in recent years, as they offer a convenient and affordable way to get around.

1.1. How to use a Ride-Hailing App?

To use a ride-hailing app, users typically need to create an account and provide a payment method. Once they have done so, they can open the app and enter their destination. The app will then show the user a list of available drivers and their estimated fares. The user can then select a driver and request a ride.

Once the ride is requested, the driver will accept it and pick up the user at their designated location. The user can track the driver’s location on the app and see how long it will take them to arrive.

After completing the ride, the user will be charged for the fare through the app. The fare is typically calculated based on the distance and time of the ride.

1.2. Advantages of Ride-Hailing App

Ride-hailing apps offer a number of advantages over traditional taxis, such as:

  • Convenience: Ride-hailing apps are very convenient to use. Users can request a ride from anywhere with their smartphone, and they don’t have to worry about hailing down a taxi or calling a dispatcher. Additionally, ride-hailing apps allow users to track their driver’s location and see how long it will take them to arrive.
  • Affordability: Ride-hailing apps are typically more affordable than taxis, especially for short trips.
  • Transparency: Ride-hailing apps show users the estimated fare for their trip before they request it. This way, users know exactly how much they will be paying before they get in the car. Ride-hailing apps also offer a variety of payment methods for you to pat.
  • Safety: Ride-hailing apps have a number of safety features in place, such as driver background checks, GPS tracking, and emergency contact information.

In addition to these advantages, ride-hailing apps can also have a number of positive benefits for society as a whole. For example, ride-hailing apps can help to reduce traffic congestion by providing a more efficient way for people to get around. They can also create jobs and boost the economy.

2. The market of Ride-Hailing apps in Vietnam

The first Ride-Hailing Services in Vietnam

Ride-hailing Services has firstly entered Vietnam Transport Market in 2014 with 2 Ride-Hailing companies – Uber and Grab. Until April 2018, Uber sold whole their market share to Grab and withdrawn their activities from Vietnam. 

The downturn in the COVID-19 period

COVID-19 caused substantial damage to the taxi business in 2020, with lockdowns and restricted periods affecting taxi demand. This led to a significant decline in the number of ride-hailing trips in Vietnam, by around 30% in 2020. However, after the COVID-19 pandemic, the demand for transportation services, primarily technology applications, increased after the country’s activities began to reopen.  

To thrive after the decrease, ride-hailing apps chose to expand with services such as online food and goods delivery and electronic payment due to the change in habits of Vietnamese consumers. 

In 2022, the revenue of Ride-Hailing & Taxi market was 3.76 billion USD and is projected to reach 3.95 billion USD in 2023. The revenue is also expected to show an annual growth (2023-2027) of 2.15%, resulting in a projected market volume of 4.30 billion USD by 2027.

Ride-hailing App & Taxi Market in Vietnam
Revenue in the Ride-hailing & Taxi Market in Vietnam

Source: Statista

The current situation of Ride-Hailing Apps in Vietnam

The market now has three major players: Grab, Gojek and Be. According to ABI Research Report, Grab is the most popular ride-hailing app in Vietnam, with a market share of over 70%, followed by Be. Gojek is the third most popular app.

According to research in 2020, Grab’s army of drivers completed 146 million rides in Vietnam in the first six months of 2019. This placed it well ahead of nearest rivals Be, at 31 million, and GoJek at 21 million.

These numbers haven’t stopped more new players from entering. In April 2023, another Vingroup subsidiary, Green and Smart Mobility (GSM) JSC, launched its newly established electric taxi brand, Green SM Taxi (a.k.a Xanh SM), in Hanoi, providing passenger transportation services using only VinFast electric vehicles. The company expects to expand their service to at least five provinces and cities nationwide this year.

Many taxi firms also began to react with the rise of ride-hailing apps in Vietnam to keep up with their traditional customers. Mai Linh, a Vietnamese taxi company, has collaborated with VNPAY, a local e-payment service provider to deploy SmartPOS devices throughout its entire fleet, making it the first in the country to provide smart payment options to customers. Some other traditional taxi companies have also started to launch their own ride-hailing applications. 

The ride-hailing market in Vietnam is also becoming increasingly competitive, with the three major players offering a variety of promotions and discounts to attract and retain customers. This competition is benefiting consumers, as it is driving down prices and improving the quality of service.

Source: e-Conomy SEA 2019 report

3. What factors contributed to the growth of the Ride-Hailing Market in Vietnam?

There are a number of factors that have contributed to the growth of the ride-hailing market in Vietnam, including:

Increasing urbanisation

Vietnam is one of the fastest-urbanising countries in the world, with an urbanisation rate of over 30%. As more and more people move to cities, there is a growing demand for convenient and affordable transportation options. Ride-hailing apps can provide a convenient and affordable way for people to get around in cities. 

Increasing availability of smartphones

Smartphone penetration in Vietnam is very high, with over 70% of the population owning a smartphone. This makes it easy for people to download and use ride-hailing apps.

Government support

The Vietnamese government has been supportive of the ride-hailing industry. The government has enacted a number of policies that have made it easier for ride-hailing apps to operate. For example, the government has legalised ride-hailing services and has created a regulatory framework for the industry.

Specifically, Article 35 of Decree No. 10 stipulates the responsibilities of ride-hailing application software providers in two cases:

In the first case, the unit only provides application software to support transport connection (does not directly operate the vehicle or driver; does not decide on freight rates) and must comply with the law on electronic transactions and other relevant laws.

The second case is that the application software provider has performed at least one of the transportation activities to make a profit (like directly operating a vehicle or deciding on freight rates), they must comply with regulations on business and conditions for automobile transport business in accordance with the provisions of Decree No. 10, the law on electronic transactions, and other relevant laws.

Competitive landscape

The ride-hailing market in Vietnam is very competitive, with a number of major players competing for market share. This competition has helped to drive down prices and improve the quality of service, such as transparency and safety. 

Meet users’ demands

Ride-Hailing Apps add plenty of features to their app, including GPS tracking, emergency call, estimated fare, driver background checks to ensure users’ satisfactions. 

Growth of food delivery

Ride-hailing apps are increasingly offering food delivery services. This is a convenient option for consumers who want to order food from their favourite restaurants without having to leave their homes.

The food delivery market in Vietnam is expected to grow at a CAGR of over 30% in the next five years. This growth will be driven by factors such as increasing urbanisation, rising disposable incomes, and the growing popularity of online shopping.

Expansion to smaller cities

Ride-hailing apps are expanding their services to smaller cities in Vietnam. This is making ride-hailing more accessible to people all over the country.

In the past, ride-hailing services were mainly available in large cities, such as Hanoi and Ho Chi Minh City. However, ride-hailing apps are now expanding their services to smaller cities and towns, including some tourist-attractions cities, such as Da Nang, Hue, Nha Trang… The expansion of ride-hailing apps is benefiting both consumers and businesses. 

Increased use of cashless payments

More and more people in Vietnam are using cashless payments to pay for ride-hailing services. This is due to the growing popularity of mobile wallets and other forms of digital payments.

Cashless payments offer a number of advantages for both consumers and ride-hailing apps. For consumers, cashless payments are more convenient and secure. For ride-hailing apps, cashless payments reduce the risk of fraud and make it easier to track transactions. It is making ride-hailing services more convenient and accessible for consumers.

Focus on safety and security

Ride-hailing apps are focusing on safety and security measures to protect their customers. This includes driver background checks, GPS tracking, and emergency contact information. It is helping to build trust with consumers and make ride-hailing services a more viable transportation option.

Rise of super apps

Ride-hailing apps are increasingly offering a wider range of services, such as food delivery, financial services, and e-commerce. This is turning them into super apps that can meet the diverse needs of their customers. Super apps are popular in Asia, but they are starting to gain traction in Vietnam as well. Ride-hailing apps such as Grab are leading the way in this regard. Grab already offers a wide range of services in Vietnam, including food delivery, financial services, and e-commerce.

The rise of super apps is a positive trend for the ride-hailing market in Vietnam. It is making ride-hailing apps more convenient and valuable for consumers.

>>> Read more: Super app: Top 7+ Asia’s leading quality super apps

The shift to electric vehicles (EVs)

Ride-hailing apps are increasingly switching to EVs. This is due to the rising cost of fuel and the government’s push to promote EVs. The shift to EVs will make ride-hailing services more environmentally friendly and affordable.

5. The challenges of Vietnam Ride-Hailing Market

Government regulation

The government in Vietnam is expected to continue to regulate the ride-hailing market. This regulation could have a significant impact on the market, both positive and negative. For example, the government could impose new regulations on ride-hailing apps, such as requiring them to obtain special licences or limiting the number of drivers they can have. This could make it more difficult and expensive for ride-hailing apps to operate.

Competition from other forms of transportation

Ride-hailing apps compete with other forms of transportation, such as taxis, buses, and motorbikes. This competition is likely to continue to intensify in the future. The government, now, invests in public transportation, such as buses and trains, to encourage citizens to use, which mainly aim to reduce traffic congestions, but also could make them more competitive with ride-hailing apps. Many traditional taxi firms are also transforming to thrive and compete with ride-hailing services. 

Safety and security concerns

There have been some incidents of violence and fraud involving both drivers and users. These incidents have raised concerns about the safety and security of ride-hailing apps. Ride-hailing companies need to continue to invest in safety and security measures to build trust with consumers. 

Despite these challenges, the ride-hailing market in Vietnam is expected to continue to grow in the future. Ride-hailing companies that can successfully address the challenges will be well-positioned to capitalise on the growth of the market.

Conclusion

In conclusion, the rise of ride-hailing apps in Vietnam has had a significant impact on the transportation landscape of the country. Ride-hailing apps have made transportation more convenient, affordable, and accessible for people all over Vietnam.

The ride-hailing market in Vietnam is expected to continue to grow in the future. However, the market is also facing a number of challenges, 

The market still has the potential to revolutionise the transportation sector in the country. Ride-hailing apps have the potential to make it easier and more affordable for people to get around, which could lead to increased economic activity and improved quality of life for all Vietnamese citizens.

If you want to join this competitive market but still do not know where to start with your app, contact AgileTech to start together today!  AgileTech is an experienced technology outsourcing company that has intense experience in this market, so we can help you with building web and mobile products and creating a clear picture for your business to succeed. Maybe your product will be outstanding in the ride-hailing industry.