According to Savico, the purpose of ComfortDelgro Savico Taxi’s decision is to look for other business opportunities as well as safeguard the capital that Savico and ComfortDelgro contributed to the joint venture.
Previously, the decision to restructure the firm’s operations was approved by Savico’s shareholders at the annual shareholders’ meeting in 2017.
At the time, Savico released that ComfortDelgro Savico Taxi faced difficulties in maintaining its operations due to the competition with Uber and Grab.
According to Savico’s 2017 financial report, the taxi joint venture had total assets of VND92 billion (US$4.038 million), however, its after-tax profit was VND235 million (US$10,316) only. Previously, in 2016, its pre-tax profit was VND4.1 billion (US$180,000), equaling 53% of its plan for the whole year.
Along with ComfortDelgro Savico Taxi, the operations of traditional taxi firms have been seriously impacted by the appearance of Uber and Grab. Notably, in Ho Chi Minh City, half of the taxi firms stopped operations and the number of taxis decreased by 30%. In Hanoi, the number of traditional taxis decreased by 35%.
Two of the traditional taxi firms suffering the most serious impact from Uber and Grab are Vinasun and Mai Linh. Notably, in the nine months of last year, Vinasun reported a revenue of VND2.45 trillion (US$107.9 million), equaling 58% of its initial annual target.
In the third quarter of 2017 alone Vinasun reported double-digit losses. Notably, its net revenue was VND547 billion (US$24.1 million) only, a record low since the end of 2011.
Besides, it reported a plunge in employees, with a total 10,000 people losing their jobs as of the end of the third quarter of last year.
Mai Linh, in the first six months of last year, reported a net revenue of VND1.72 trillion (US$75.4 million), decreasing 5% on-year.
Profit from other activities decreased by 16%, to VND29 billion (US$1.29 million), only half of what it was in the first half of the previous year.
The number of Mai Linh employees decreased by approximately 6,000 to 24,000, decreasing 20% on-year.