Grab and Uber choking out traditional competition

Vietnamese taxi company Vinasun has seen a decrease in revenue and employees in the first half of this year, claiming it due to the unfair competition in terms of price posed by Grab and Uber.

grab and uber choking out traditional competition hinh 0
Grab and Uber dominating HCM City and Hanoi

Traditional taxi companies, especially Vinasun and Mai Linh Group, are losing the fierce competition with Grab and Uber due to the dizzying rise in the number of Grab and Uber cabs.

According to newswire Vneconomy, in recent years, the number of Uber and Grab taxis has exceeded the figure of Ho Chi Minh City’s taxi planning. Notably, Uber and Grab’s fleet has reached a total of 21,000, while Ho Chi Minh City’s taxi demand is 11,000-12,000 only.

The oversupply of cabs has not only contributed to traffic jams and losses in tax revenue, but also created difficulties for traditional taxi companies.

Now Uber and Grab are battling for dominance, while competing with traditional taxi brands at the same time.

In general, UberX fares range about VND7,000-8,000 per kilometre, while GrabTaxi charges VND9,000-11,000 per kilometre. In spite of this difference in fares, both Uber and GrabTaxi have their own tactics to seize passengers.

Mai Linh Group and Vinasun lament competition

Vietnamese taxi company Vinasun has reported an decrease in revenue and employees in the first half of this year.

According to newswire Vnexpress, in the second quarter of this year, Vinasun’s net revenue reached VND810 billion ($35.75 million) only, a record low since 2014. Besides, the after-tax profit in the second quarter fell 50 per cent on-year to VND16 billion ($706,299). The cumulative figure of the first six months was VND1.9 trillion ($706.29 million), signifying a decrease of 15 per cent on-year.

Within the first six months of this year, the number of Vinasun's employees decreased by approximately 8,000 people, to 9,179.

According to a Vinasun representative, the company’s business results may remain gloomy until the end of this year.

Regarding Mai Linh Group, according to its 2016 financial report, the company’s revenue was VND3.73 trillion ($164.65 million), equalling an increase of 32.3 per cent on-year. However, its pre-tax profit was VND61.12 billion ($2.74 million), a sharp 62 per cent fall due to increasing financial and management expenditures.

Besides, Mai Linh claimed that the dizzying growth of the fleets of Grab and Uber makes it increasingly difficult for the company to perform.

Traditional taxi companies persist

In early June, Ta Long Hy, deputy general director of Vinasun, said the company would keep pressing litigation against Grab and Uber for unfair competition, a campaign that has recruited many other Vietnamese taxi companies from Hanoi and Ho Chi Minh City.

Hy said that the company is gathering evidence. Besides, Vinasun would also propose that the government review its price management policies.

Vinasun is not alone in its claim of unfair competition against Uber.

In December 2016, as reported by indiatimes.com, the Indian equivalents of Uber, Ola and Meru, have separately urged government agencies to formulate policies which would undercut the ability of US-based Uber to offer steep discounts to passengers and generous incentives to drivers.

On April 7, as reported by the Guardian, in a ruling that is subject to appeal, a court in Rome upheld a complaint filed by taxi unions and banned Uber because it contributes to unfair competition.

The court gave Uber ten days to terminate the use of its various phone applications on Italian territory, along with promotion and advertising activities. However, the ban was suspended about a week after it was implemented as the company appealed. On May 26, the ban was officially lifted.

VIR

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