Driving Growth: Vietnam Car Rental Market Gears Up for 7.34% CAGR through 2027 - Makreo Research

The car rental sector in Vietnam is currently in a phase of development, characterized by a fragmented market landscape. This fragmentation, however, serves as a fertile ground for both domestic and international companies to explore exciting prospects within the industry. They have the chance to leverage technological advancements and play a pivotal role in various mergers and acquisitions taking place.

Notably, the car rental industry in Vietnam has experienced a surge in recent years, and it is now approaching levels seen in more mature markets. This transformation is largely attributed to the entry of substantial international corporations into the Vietnamese market.

The car rental market in Vietnam has demonstrated robust growth in the past and is poised to continue its expansion. Projections indicate that the market is expected to grow at a Compound Annual Growth Rate (CAGR) of 7.34% during the period from 2022 to 2027. This anticipated growth trajectory underscores the enduring potential of the car rental industry in the country.

In 2021, the market achieved a significant milestone by recording total revenue amounting to USD 1.99 billion. This impressive figure signified the industry's resilience and its ability to serve a diverse array of customers, from tourists to business travelers and local residents.

However, it is worth noting that the market has encountered certain challenges that have hindered its full recovery. The post-COVID-19 era brought with it unique hurdles. One such challenge was the rise in fuel prices, which posed financial strain on car rental companies and contributed to increased operational costs. Additionally, there has been a shortage of drivers, possibly due to changing workforce dynamics or safety concerns arising from the pandemic.

These factors, combined with the broader economic impact of the pandemic, have meant that the car rental market in Vietnam has not yet fully rebounded to its pre-pandemic levels. Nonetheless, the industry remains on a growth trajectory, and stakeholders are actively adapting to these challenges by implementing strategies that prioritize sustainability, cost-efficiency, and meeting the evolving needs of their customers.

As the car rental market continues to navigate these challenges and opportunities, it will be essential to strike a balance between addressing short-term obstacles and maintaining a long-term growth outlook. This delicate equilibrium will be crucial in determining the industry's ability to flourish in the dynamic Vietnamese market.

► Tourism Driving Car Rental Service Demand
In addition to the evolving dynamics of the car rental industry in Vietnam, the influx of tourists plays a pivotal role in shaping its trajectory. As of June 2022, Vietnam experienced a remarkable surge in foreign visitor arrivals, with a staggering 954,600 tourists gracing its shores. This figure represents a tenfold increase compared to the same period in the previous year.

The resurgence of Vietnam's tourism industry was further underscored by a significant milestone in July 2022. During this month alone, the country welcomed 352,600 foreign visitors, signifying a substantial 49% surge compared to the preceding month. In a broader context, this number was an astounding 47.2 times greater than the figures recorded in 2016.

However, it is essential to contextualize this growth. While the recent surge in foreign tourists is a promising sign, it's still in the process of recovering to pre-pandemic levels. In comparison to the same period in 2019, before the outbreak of COVID-19, the number of foreign tourists had experienced a 90.3% decline from January to July. Nevertheless, during this time, the tourism sector contributed significantly to the economy, generating 11.9 trillion VND (approximately USD 509.85 million) in revenue.

► Challenges in the Vietnam Car Rental Industry
The car rental industry in Vietnam is navigating not only the opportunities presented by tourism growth but also the challenges posed by rising fuel prices and inflation. These factors have a significant impact on car rental companies, drivers, and passengers alike.

In recent times, Vietnam has experienced a notable surge in fuel prices. The price of petroleum in the country has undergone a rapid ascent, which has repercussions for the entire transportation sector. To put this into perspective, as of June 21, the price of petroleum had escalated from a relatively standard 2,300 Vietnamese dong (equivalent to USD 0.99) per liter at the beginning of 2022 to nearly 3,300 Vietnamese dong (approximately USD 1.42) per liter.

This represents the third consecutive increase in fuel prices within the country up to June 2022, illustrating the ongoing challenges associated with the volatile global oil market.

■ Dominance of Vinasun and Mai Linh in On-Airport Car Rental Market
In the highly competitive landscape of Vietnam's car rental industry, Vinasun and Mai Linh stand out as dominant players, particularly in the on-airport car rental segment. Their distinct advantages, exclusive passenger lanes, and strategies have positioned them ahead of ride-hailing providers.

■ Exclusive Airport Presence: Vinasun and Mai Linh have a strategic advantage at airports, where they occupy exclusive lanes designated for passengers. This privileged access allows them to offer convenient and efficient services to travelers arriving at the airport. Ride-hailing providers, while present, face stiff competition from these established players.

■ Tourist Preferences: Tourists often prefer taking traditional taxis like Vinasun and Mai Linh directly from the airport. In many cases, travel agents arrange these rides for their clients, further benefiting these taxi companies. This preference for traditional taxis among tourists has contributed to Vinasun's continued success in this segment.

■ Embracing Technology: To stay competitive in the era of ride-hailing apps like Grab, Vinasun and Mai Linh have adapted by incorporating technology into their businesses. They have implemented digital solutions to enhance the booking process, improve customer service, and streamline operations. This technological integration allows them to compete effectively with modern ride-hailing brands.

■ Heading: Challenges Faced by Ride-Hailing Providers
While ride-hailing service providers like Grab have gained a dominant share in personal transportation within cities like Hanoi and Ho Chi Minh, they are currently grappling with significant challenges that may affect their standing in the market.

■ Shift in Market Dynamics: One of the major challenges for ride-hailing companies is the recent surge in fuel prices. Rising fuel costs have altered the cost dynamics of operating a vehicle, impacting the profitability of drivers and the overall fare structure. This shift in market dynamics has led to increased costs for both drivers and passengers.

■ Loyalty Erosion and Driver Shortages: As fuel prices rise and the cost of driving for ride-hailing services increases, some loyal clients of ride-hailing platforms like Grab are exploring alternative transportation options. Additionally, the industry is facing challenges related to driver shortages, which can lead to longer waiting times for passengers.

■ Outlook for Traditional Taxis: Despite the challenging economic conditions and the difficulties faced by the car rental market, traditional taxi services experienced a positive demand outlook in 2021. This suggests that, in certain contexts, traditional taxis are regaining popularity due to their reliability and established presence.

■ Longer-Term Prospects: While there is optimism regarding the demand for traditional taxis, industry experts are cautious about predicting a short-term turnaround. The car rental market continues to face stiff competition and uncertainty, driven by factors like fluctuating fuel prices and other variables beyond their control.

In conclusion, the car rental landscape in Vietnam is evolving, with traditional taxi companies like Vinasun and Mai Linh leveraging their advantages at airports and adapting to technology-driven competition. At the same time, ride-hailing providers face challenges related to rising fuel prices, loyalty erosion, and driver shortages. The future of the industry remains uncertain, and its trajectory will depend on how these players navigate the changing market conditions.

► "Vietnam Car Rental Market - Ride Hailing and Taxi Services Outlook (2018-2027)"
The most recent edition of the report, published by Makreo Research, delves into the dynamic landscape of Vietnam's car rental industry, encompassing both ride-hailing and traditional taxi services. Given the volatile economic conditions and ever-evolving competition within the market, staying informed about the latest developments is crucial, making this report an indispensable resource for industry stakeholders.

■ Comprehensive Market Insights: This report offers a comprehensive analysis of the Vietnam car rental market, providing in-depth insights into various facets of the industry. It goes beyond surface-level information to offer a deep understanding of market dynamics and trends.

■ Focus on Ride Hailing and Taxi Services: One of the report's key highlights is its extensive coverage of both ride-hailing and traditional taxi services within Vietnam. It explores the intricacies of these two segments, shedding light on their individual challenges, opportunities, and growth trajectories.

■ Regional Market Performance: The report also offers a breakdown of market performance by major cities in Vietnam. This regional perspective allows readers to gain insights into how market dynamics differ across various urban centers within the country.

■ Thorough Historical, Current, and Future Analysis: A meticulous assessment has been carried out, enabling readers to review the historical developments, current market status, and future growth prospects of the car rental industry in Vietnam. Given the significant changes brought about by the COVID-19 pandemic, such insights are invaluable for informed decision-making.

■ Addressing Key Industry Shifts: The report recognizes and addresses several critical shifts that have impacted the market, including the rise in fuel prices, fare adjustments, and shifts in consumer preferences. By dissecting these changes, it provides a roadmap for understanding the future growth trends of the industry.

► Key Questions Answered
■ To evaluate the present Taxi Market performance which aggregates Car Rental and Cab Aggregators in Vietnam.
■ To assess how the Taxi Market business is being carried out in Vietnam and analyse it's scope of improvements.
■ To confer the major government regulations and it's impact on key business strategies of competitors.
■ To assess future demand for taxi in Vietnam and expected revenue growth.
■ To evaluate impact of COVID-19 over both taxi market and cab haling market in Vietnam.
■ To identify key market variables having a direct or indirect impact over the Vietnam car rental market.
■ To study the level of competition present among ride hailing service providers and taxi service providers.
■ To identify challenges present in the Vietnam car rental market and measures to overcome.
■ To evaluate economic environment of the country and major macro economic factors accounting for shift in the market performance.

To Know More:
Vietnam Car Rental Market - Ride Hailing and Taxi Services Outlook (2018-2027) Edition-2022
https://www.makreo.com/report/vietnam-car-rental-market-ride-hailing-and-taxi-services-outlook-2018-2027

Thailand Car Rental Market Future Outlook to 2026-Self Drive to Propel Growth
https://www.makreo.com/report/thailand-car-rental-market-future-outlook-to-2026-self-drive-to-propel-growth

Makreo Research and Consulting
801, Trishul Goldmine, Palm Beach, Sector 15, Belapur, Navi Mumbai, Maharashtra 400614

Contact us at:
Meetu Bhasin, Director of Research and Operations
Phone Number
+91-9619699069
Email Address
info@makreo.com

Makreo is a Market research and consulting firm working closely with business conglomerates worldwide to help them in many aspects of driving their business growth and assist in making wise decisions with the help of our qualitative & quantitative market insights.

This release was published on openPR.