Asia Business Channel

Hanoi taxi companies plan merger to fight Grab

Three Hanoi taxi companies have banded together to create the largest taxi business in the capital and compete with Grab. The new group will be named G7 Taxi, and has plans to undercut the fares of Grab on short distances. The three taxi companies are hoping that other taxi companies in the capital city will also join their network in the future.

The Thanh Cong taxi company along with partners Ba Sao taxi and Sao Hanoi taxi formed G7 in October. Together, they will have a combined fleet of 3,000 cars, approximately 20% of taxis in the Hanoi area.

In order to compete with Grab, The G7 base fare is 9,900 VND (43 U.S. cents) for the first one kilometer, while Grab charges 20,000 VND (86 U.S. cents) for the first two kilometers. Since G7’s fee for one kilometers is only half of Grab’s it hopes that customers going on short trips will use its taxis as an alternative to Grab.

Nguyen Cong Hung, chairman of the Hanoi Taxi Association, had said: "Traditional taxis, each with their own app, are now trying to compete with Grab. But we are divided, therefore we need to unite."

Before Thanh Cong, Ba Sao, and Sao Hanoi teamed up, annual sales at the three companies had declined by 10 ~ 15% on average over the past three years, while the number of taxi companies in Hanoi has also fallen from 115 in 2010, to 70 taxi companies in 2018.

G7 in Hanoi is not alone in find new business models and strategies to compete against Grab. In March, southern taxi firm Vinataxi announced plans to merge ComfortDelgro Savico Taxi. Comfort had suspended operations earlier this year due to heavy competition. Vinataxi, the third largest taxi firm in Ho Chi Minh City said at the time of the merger that it was confident that the merger would increase its growth six-fold this year.

Other taxi companies in Vietnam have announced their own digital / social strategies to compete against Grab and each other. Mai Linh Taxi, Vietnam's No. 1 taxi operator has developed a smartphone app similar to that of Grab while Vinasun, the #2 taxi company, has launched a ride-hailing service using Facebook's Messenger app.

But Grab, the dominant player in the ride-hailing business in Vietnam, isn't standing still and is also working on strategies to compete better with local taxi firms.

In the summer, it introduced Grab for Business, a service that helps a company track the trips its employees make to control expenses. Grab is also deploying various policies to attract drivers by offering bonuses and other driver incentives.

From the perspective of Vietnam’s consumers who use ride-hailing services, the increase in new operators is welcome. Many people were dismayed with Uber left the market since it gave Grab a dominant position and consumers were faced with higher prices due to the decreased competition.

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