Taxi firm Vietnam Sun Corporation (Vinasun) plans to cut its full-year revenue for the fourth time for 2018 due to rising competition from foreign ride-hailing firms.

The figure for 2018 could be set at VND2.16 trillion (US$96 million), down VND1.07 trillion year-on-year, of which transportation and merchandise income would account for VND2 trillion and the remainder would come from asset sales.

Vinasun also forecasts its post-tax profit for this year would be VND95 billion, half of the figure in 2017. This is the lowest figure for the firm in the past nine years.

The earnings forecast would be submitted for approval at the firm’s annual shareholder meeting, which is scheduled for April 27. The company has not yet published its full-year financial report for 2017.

In 2018, the taxi company will focus on preserving its market share and keeping its business operating properly in the face of strong competition from rival ride-hailing applications.

In order to do that, Vinasun will buy at least 700 high-quality vehicles, develop its non-cash payment methods and diversify its business co-operation models.

In addition, Vinasun will propose the transport ministry categorise business activities of ride-hailing applications to assure a fair market for domestic taxi firms.

Vinasun has reported slower growth rates in both net revenue and profit since the two ride-hailing applications Uber and Grab entered Viet Nam in mid-2014.

From 2010-15, Vinasun’s net revenue increased from over VND1.64 trillion to VND4.25 trillion. The HCM City-based taxi company also recorded that its post-tax profit grew from VND179.4 billion to VND329.3 billion. In 2016, however, the company’s net revenue grew at a slower pace to reach VND4.5 trillion, while its post-tax profit fell to roughly VND312 billion.

In the first half of 2017, Vinasun performed even worse as its net revenue dropped 16 per cent year on year to VND1.9 trillion and its post-tax profit declined by a third to VND100 billion.

The taxi firm is listing nearly 68 million shares on the HCM Stock Exchange. Its shares have dropped gradually by nearly 60 per cent since September 28, 2016 to close Monday at VND13,400 (60 US cents) per share.

Tougher taxi market after merger

According to Vinasun’s deputy general director Ta Long Hy, the merger between Uber and Grab in Viet Nam could result in a monopolistic taxi market and local taxi companies could suffer from such a market condition.

After Uber and Grab merged, the total number of ride-hailing app vehicles had increased to 78,000 across the country and that number was much bigger than 20,000 traditional taxis in Viet Nam, he said.

“The number of high-tech taxis is accounting for 80 per cent of the overall market, which could lead to a market monopoly for the foreign firm. And it is the question on how the Government would solve the problem,” cafef.vn cited Hy as saying.

Traditional taxi firms would have to adapt to new market conditions, he said. Vinasun has developed an application to meet rising demand from customers and keep up with market trends.

In the near future, both taxi drivers and passengers would know exactly how much a fixed trip would cost based on the expected travel distance in the application, just like other ride-hailing firms, instead of using the meter to calculate the fares for passengers, he said. — VNS