Vietnam's major taxi company Mai Linh has reported the worst business in five years while another big player Vinasun projected a 50-percent drop in profit this year, and the two blamed competition with ride-hailing apps.
Despite arriving late in Vietnam's taxi market, Uber and Grab have been winning significant footholds for their fare transparency, quality of service and fashionable technology.
The unlisted Ho Chi Minh City-based Mai Linh said its transport business lost nearly VND84 billion ($3.7 million) last year, after making a profit of VND325 million in 2015.
The company’s net profit last year, plunged nearly 70 percent in the same period to VND43 billion, the firm's financial report showed.
Ho Huy, chairman of the company's management board, said Uber and Grab were key reasons to have made 2016 a difficult year for Mai Linh and other traditional taxi firms.
He said the market has seen “harsh competition”, with unfair taxation. Uber, for example, was paying a 3-percent value added tax, while taxi firms said they have to pay a 10-percent VAT and 20 percent corporate income tax. Uber now keeps 20 percent revenue of a ride and sends 80 percent to the driver.
Huy also blamed Uber and Grab for worsening traffic in Ho Chi Minh City by adding 25,000 cars to the streets in recent years.
Vinasun, also based in Ho Chi Minh City, said competition with ride-hailing apps has made it lower the profit target for 2017, the third cut in a row.
Vinasun's gross profit is now projected at VND205 billion, down 48 percent from 2016, based on the company's plan to be submitted to the shareholder meeting scheduled late this month.
But the blaming has received little support from the public, as many people said they were unhappy with poor and unreliable services provided by taxi firms, such as drivers refusing to serve short distance or failing to show up regardless of clients' booking.