Foreign newspaper: GSM and Be taxis are a combination of two domestic ‘champions’, enough to scare the ‘rich guy’ Grab.

According to Techinasia, right at the time when it seemed that the car-hailing war in Vietnam had ended, suddenly the market appeared a new development that completely changed the game.

Accordingly, after 9 years of operation in Vietnam, Grab has become so popular that its drivers are almost everywhere in major cities. However, a new competitor has suddenly appeared.

Pham Nhat Vuong, the Vietnamese billionaire behind Vingroup and electric car manufacturer VinFast officially launched a new electric car calling service called Green SM Taxi in Hanoi.

Green SM Taxi belongs to the company Green and Smart Mobile (GSM), in which Vingroup Chairman owns 95% of the shares. It is not surprising that the company calling for electric cars will exclusively use VinFast cars – specifically the VF e34, VF8 and VF5 Plus models – in the initial stage of operation.

In an email interview with Tech in Asia, GSM CEO Nguyen Van Thanh did not comment on whether GSM aims to become a super app. For now, the company just wants to “focus on providing electric car rentals and electric taxis,” he said.

GSM recently entered into a lease agreement with Ahamove, a Temasek-backed Scommerce on-demand delivery service, as well as with a local traditional taxi brand. Most notably, the company also invested an undisclosed amount in Be Group, Grab’s biggest rival in Vietnam.

This is not the first time Vingroup has ventured into the ride-hailing sector. In 2019, VinFast signed an agreement with FastGo – considered a notable local competitor to Grab at the time – but unfortunately could not succeed. A series of other domestic ride-hailing companies also suffered the same fate.

However, at that time, VinFast had not yet switched to exclusively producing electric vehicles. So will this bet change anything?

The most attractive point in the partnership between GSM and Be Group is electric vehicles. But, one industry analyst said, “that doesn’t mean the local market is ready for this development.”

“Ten thousand electric vehicles is a pretty good number, but how much the market can absorb it is another story,” this person added. “When drivers don’t have enough trips, they give up.”

Another obvious challenge is the limited vehicle charging infrastructure. However, the CEO of GSM said his company can take advantage of VinFast’s network of 150,000 charging ports for electric cars and e-scooters. In February, VinFast announced plans to deploy mobile battery chargers across Vietnam’s provinces by the end of the year.

As for Be Group, the company agrees that the transition to electric vehicles is still at a very early stage and is a “difficult task” in Southeast Asia, but insists it is “an investment for the future.”

The cooperation between GSM and Be Group is advertised as mutually beneficial. In the first phase, Be drivers will enjoy exclusive preferential policies when renting or buying VinFast cars.

GSM electric taxi services will be available on the Be platform within the next two months. The partnership will also be extended to delivery services.

A Be spokesperson told Tech in Asia that both companies want to make 100 million tram rides through their platforms over the next few years. “Users can experience electric vehicles and see for themselves what it feels like to use an economic, quiet, high-tech and eco-friendly vehicle every day,” he added.

After five years of operation, Be has proven itself to be Grab’s most notable local competitor. The company says it has about 32% market share and plans to be profitable by 2024.

Last year, Be secured a loan of about $60 million from Deutsche Bank. But this is significantly less than the $16.5 billion Grab has raised so far, according to Crunchbase.

However, linking up with the Vingroup founder’s electric vehicle joint venture has given Be a huge boost not only in terms of financial resources but also in terms of promotion – both sides have been hailed as two world champions. local enemy.

Obviously, Grab has not had a smooth path to reach its current dominant position in Vietnam. A few years ago, they had a protracted battle with the traditional taxi company Vinasun.

In 2019, the company said it would invest 500 million USD in Vietnam in the next 5 years. But that was before Covid hit and the current tech downturn – it’s unclear if Vietnam will still be a priority for Grab.

Last December, the super app appointed Alejandro Osorio, a former Grab Thailand executive, to lead in Vietnam. The company stresses that Osorio is good at building “high-performing” local teams.

A few years ago, Grab was able to roll out incentives and subsidies to appeal to both drivers and consumers across markets. But those days are clearly over.

Unlike other ride-hailing apps, GSM doesn’t need to map out a super app roadmap at the moment. They can exploit and target mobility needs in businesses like Vincom (shopping malls), Vinhomes (residential areas) and Vinschools (schools) – all within the Vingroup ecosystem.

In the first phase, Green SM Taxi will operate 500 VF e34 and 100 VF8 vehicles in Hanoi, with plans to expand to at least 5 provinces and cities across Vietnam this year. The investment can scale up to 10,000 VinFast cars and 100,000 electric motorbikes in the following phases.

In a word, Gojek Vietnam says it has around 200,000 drivers while Be gives its own number at 100,000. A few years ago, Grab said it had about 175,000 drivers in Vietnam. Meanwhile, GSM’s potential target is 110,000 drivers.

As for pricing, GSM says the price per kilometer can range from 12,000 to 21,000 Vietnamese dong ($0.5 to $0.9). According to the CEO, the surcharge policy is still being finalized and emphasizes that the company is “committed to offering competitive prices that benefit both users and drivers”.

For comparison, booking a four-seater GrabCar in Hanoi will cost VND29,000 ($1.24) for the first two kilometers and VND10,000 ($0.43) for each subsequent kilometer. For Be, it’s 30,000 VND ($1.28) for the first two kilometers and an additional 10,000 VND for each subsequent kilometer. Of course, these rates vary depending on a number of factors dictated by the algorithms of these apps.

Another difference is that GSM provides a car and pays a fixed salary (up to 11 million VND, equivalent to 470 USD/month) for the driver. The company adds that drivers’ commissions can range from 20% to 25% of their monthly revenue.

All are promising elements, but are they enough for GSM to survive the fierce competition in the ride-hailing sector?

After operating for about a decade, both Grab and Gojek are still unprofitable, which means the companies have to stay in the field for the long haul.

There are also some concerns about whether Vingroup is fully committed to this ride-hailing project or just sees it as another channel for marketing VinFast cars.

When asked if GSM would expand its tram-calling model to other Southeast Asian countries, the company’s CEO revealed that the company is working with “several potential partners.”

One thing is for sure at this point, more options are clearly better for Vietnamese consumers.

Source: Techinasia