Can traditional taxis survive the onslaught of ride-hailing apps in Vietnam?

By Trang Bui   October 10, 2017 | 08:01 pm GMT+7

Seemingly priced out of the game, drivers, passengers and experts discuss the fate of local cab firms.   

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Mai Linh and Vinasun used to be the biggest, the most reliable local cab firms in Vietnam. Photo via Flickr/Prince Roy under Creative Commons license

A phone call and a five-to-ten minute wait. A few more phone calls and a cab arrives...if you're lucky. If not, an apology from the call center and you’re late for the airport.

That was three years ago, but now for many Vietnamese, the idea of dialing a taxi call center is an alien concept. In the new era of technology, Grab and Uber are beating street taxis with just the click of a button.

And it is not just the passengers who have been won over. Easy registration and flexible working hours have drawn over 50,000 cab drivers to work for Uber and Grab in Vietnam, with many leaving traditional taxi firms in search of a better living.

Vinasun, Vietnam’s biggest taxi firm in 2014, lost 8,000 drivers this year, almost half of its employees, while rival Mai Linh Taxi also lost 6,000 drivers.

A doomsday scenario for traditional taxi firms is foreseeable.

“I honestly don’t care if traditional taxis disappear,” Nguyen Huyen Trang, a 26-year-old Hanoian working in Saigon told VnExpress International. “Even if they do survive, I don’t think I need them.”

“It's not worth investing in a motorbike when you’re lazy and afraid of being stopped by the traffic police,” Trang elaborated. “I’m not familiar with Saigon’s streets so it’s best just to book cheap Uber or Grab rides.”

A professional ride-hailing app user, Trang has no difficulty booking rides even late at night or early in the morning. She also books her rides to the airport – a destination still dominated by taxi companies.

In her six months as a Grab and Uber regular, Trang has only hailed a street taxi once when it was stormy.

“I was in a hurry,” Trang said. “If I hadn't been I wouldn’t have minded waiting 5 or 10 minutes for an Uber or Grab.”

Trang went on to extol the perks of ride-hailing apps: clean cars and rating-aware drivers, hence a better attitude and a feeling of safety. She also expressed her distaste for traditional taxis that she said are outdated and often overcharge.

The comments section on VnExpress and multiple posts on social media agree with Trang. To the public, traditional taxis have long been associated with reckless driving, dirty seats, an unwillingness to take short journeys and the risk of being overcharged.

A video captured in July showing a Vinasun driver fighting with a call center operator for booking short trips confirms the stigma.

Vain attempts

Ta Long Hy, chairman of Vinasun, did not reply to calls from VnExpress International on Tuesday as the company was in the middle of a media crisis.

From October 7-9, thousands of Vinasun taxis poured onto Saigon’s streets displaying red and yellow bumper stickers saying: “Grab and Uber must abide by Vietnamese law” and “Stop pilot scheme for Grab and Uber.”

While Hy told local media that the “drivers had stuck the stickers on themselves”, a video recorded by VnExpress shows a driver recalling how he had been instructed to add the bumper stickers by the company’s technical team.

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A Vinasun taxi seen on the street on October 8, 2017 with bumper sticker saying "Grab and Uber must abide by Vietnamese law”. Photo by VnExpress/Hong Nhut

“We don't have the spare money to do this to a company car," the driver said. "Before, I earned VND800,000 to VND1,000,000 ($35-$44) a day. Now there are days when I go home without earning anything,” the driver said.

Officials from the Ministry of Industry and Trade told VnExpress that the slogans were derogatory and may have violated the Competition Law.

Uber and Grab operate legally in Vietnam as part of a pilot scheme that also allows for 10 or more app-based ride-hailing services, including the apps launched by Vinasun and Mai Linh.

The taxi firms also plan to launch their own motorbike ride-hailing apps, but that hasn't stopped Vinasun from threatening to sue Grab and Uber for unfair competition on multiple occasions.

But with fares almost double their rivals, their way out is limited.

“Before, these taxi firms formed associations that created rules and barriers,” said Huynh The Du, a public policy expert at the Fulbright Economics Teaching Program in Saigon. “They have been enjoying limited competition for a very long time, but now Grab and Uber are breaking down the wall.”

“Even if taxi firms are able to cut costs by eliminating these barriers, and Grab and Uber stop their price war, there’s still a big price gap,” Du continued.

“The evolution of technology can’t be reversed, and that’s the brutal truth for traditional taxi firms."

In search of a lifeline

With the price and service war seemingly already lost, driver and customer numbers may be the only light at the end of the tunnel for these taxi firms.

Nguyen Thi Thu Thuy, 59, a retiree who doesn’t own a mobile phone and relies completely on traditional taxis, thinks local road knowledge trumps all - a reason London's black cabs and New York's yellow cabs are also clinging to in the fight against ride-hailing apps.

“I like to hop into a taxi as soon as I hail one in the street, and traditional taxis, they know the roads," Thuy said. "My daughter has booked Grab for me a few times but it was time-consuming. They just drive around not knowing exactly where they are going." 

But Trang, the Grab and Uber regular, found the idea amusing.

“Honestly, a lot of traditional taxis don’t know their way around either. I’d rather pay a cheap price and help the driver out using GPS.”

Against all odds, Vietnamese pride is another lifeline that could be thrown to traditional taxi firms.

“I support traditional taxis because they are Vietnamese firms," Thuy said. "I think it’s better to have both kinds of taxis. The more competition there is, the better service customers receive.”

Grab drivers in a Facebook group also told VnExpress International that if they were offered a better salary, they'd be happy to switch to support a local business.

Bui Quang Huy, a 35-year-old who bought a new car to work full time as a Grab driver, thinks the competition is healthy. "It gives drivers like us more options," he said.

Every day he earns VND500,000 to VND700,000 ($22-$31) working 10-to-12 hours straight. Huy estimates he needs three years to break even. 

But regarding concerns of a future monopoly or limited competition, Du, the public policy expert, dismissed the notion with a laugh.

“There’s no need to worry about oligopoly when the traditional form of taxi disappears," Du said. "The market is open to any brand of ride-hailing services, not just Grab and Uber.”

“There will come a time when the market, the number of drivers and their salaries balance themselves out," he said.

“Any protests or threats of legal action are just temporary delays. Traditional taxis will have to transform or they'll disappear.”