Vietnam’s taxi market has become a battleground with fierce competition driving foreign giants like Gojek out and local traditional taxi firms into decline.

Amidst this turmoil, billionaire Pham Nhat Vuong’s Xanh SM has emerged as a strong contender, reshaping the industry with its innovative electric taxi model.

A challenging market

In September 2024, Gojek, Indonesia’s ride-hailing and food delivery unicorn, announced its exit from Vietnam, choosing to focus on markets where it dominates, such as Indonesia and Singapore.

This marked another shift in Vietnam’s competitive ride-hailing market, where Gojek struggled despite its success in other countries.

Previously, in 2018, Uber exited Southeast Asia, selling its operations to Grab. This left Grab as the leading foreign ride-hailing platform in Vietnam, dominating the market while traditional taxi companies faced mounting difficulties.

Among these, Vinasun, once Vietnam’s largest taxi firm, struggled for years due to competition from technology-based services like Uber and Grab. The COVID-19 pandemic in 2020 dealt a further blow, forcing the company to lay off nearly 1,400 employees and report losses of 210 billion VND ($8.8 million) in 2020 and 277 billion VND ($11.6 million) in 2021.

Though Vinasun returned to profitability with 150-180 billion VND ($6.3-7.5 million) in 2022-2023, it has shown signs of slowing in 2024.

On January 5, Tael Two Partners Ltd., a Singapore-based fund, sold its remaining 5 million shares in Vinasun after holding them for over 11 years. Vinasun’s stock price has fallen by over 35% in the past year, reflecting the company’s challenges.

Mai Linh, another traditional taxi giant, has faced similar struggles, including low profits, frequent tax arrears, and merger activity to stay afloat.

The rise of Xanh SM

While some companies falter, Xanh SM, founded by billionaire Pham Nhat Vuong in early 2023, has rapidly grown to become Vietnam’s second-largest ride-hailing platform, trailing only Grab.

Xanh SM’s electric taxis are revolutionizing the market. By the end of 2024, the company had entered Indonesia with 1,000 VinFast VF e34 electric vehicles and signed agreements with major partners like Vietjet, Huawei, and Visa to promote green transportation.

In Vietnam, Xanh SM continues to expand, having formed partnerships with traditional firms like Mai Linh, which integrated 4,000 VinFast electric taxis into its fleet.

Xanh SM’s contributions to Vingroup’s 2024 revenue exceeded 5.7 trillion VND ($240 million), underscoring its potential as a dominant player in the market.

New entrants and changing dynamics

The market has also welcomed smaller players, such as Let’s Go Taxi, which launched in 2024 with a fleet of VinFast VF3 electric minicabs in Phu Yen Province. Let’s Go Taxi offers highly competitive rates, comparable to motorcycle taxis, to attract customers.

Meanwhile, traditional taxi firms like Thanh Nga, Bac A, and Long Bien are transitioning to electric vehicles to remain competitive.

Local ride-hailing platform Be has also gained traction, challenging Grab’s dominance and contributing to Gojek’s decision to exit Vietnam.

Surveys by Q&Me indicate that while older users prefer Grab, Gen Z users increasingly favor domestic apps like Xanh SM and Be.

Market potential

According to Mordor Intelligence, Vietnam’s ride-hailing market, including technology-driven taxi services, was valued at nearly $730 million in 2023.

With the rapid adoption of electric vehicles and domestic players like Xanh SM and Be gaining momentum, the market is poised for continued transformation.

While foreign giants like Gojek and traditional firms like Vinasun face mounting challenges, Xanh SM and other domestic players are redefining Vietnam’s taxi market. Supported by innovative business models and a focus on sustainability, Xanh SM is emerging as a formidable competitor, not only in Vietnam but also in the global market.

Manh Ha