While passengers are praising the arrival of UberMOTO, the latest motorbike-hailing app to enter the Vietnamese market, not everyone is thrilled about the influx of new transportation services available around town.
According to Thanh Nien, Vinasun recently announced its business projections for 2016 and they're not pretty. The company expects its net profits to fall by 20% to VND264 billion (US$11.68 million).
For traditional cab companies like Vinasun, the digital age has been tough. Last year, the firm reported a meager 5% profit increase, a far cry from Vinasun's 2014 profits, which saw a staggering 40% increase from the previous year. So far in 2016, Vinasun's profits fell over 73% short of its first quarter target.
Though apps like Uber were initially outlawed, Saigon's transport officials have come around to such services, putting cab companies in a difficult position. Just a few months ago, Vinasun itself launched a taxi-hailing app for their own vehicles in hopes of competing with Grab and Uber.
At a shareholders meeting, board chairman Dang Phuoc Thanh pointed to rising costs and stiff competition from apps like Grab and Uber as reasons for the company's profit decline. According to Thanh, Vinasun pays VND18-20 billion (US$807,120-896,800) in taxes alone each year.
In an effort to boost its business, Vinasun plans to reduce fares in the near future from VND16,000 per kilometer to VND15,000. The firm will also add also adding 1,150 new taxis to its fleet, bringing the total count to over 6,400 vehicles.
