HO CHI MINH CITY (Reuters) - A young, tech-savvy population short on cars but big on smartphones is driving double-digit growth for ride-hailing apps Uber and GrabTaxi in Vietnam, and inspiring some executives to dream of replacing private car ownership altogether.
Uber launched its service in Vietnam last year and says Ho Chi Minh City and Hanoi already have the highest average numbers of trips per user out of the 300 cities in which it operates, double the rate in New York.
Ride-sharing apps have taken off among Vietnam’s rapidly expanding middle class as they provide four-wheeled comfort in a country better known for chaotic swarms of scooters and Southeast Asia’s most expensive taxi fares.
“The price is good, the service is good,” said Uber user Nguyen Phi Yen, who runs a career counseling firm in Ho Chi Minh City.
“Uber drivers have good taste in music. Even the cars smell better than taxis.”
With less than three people out of every 100 owning cars in Vietnam, a country of 90 million people, and one of the fastest-growing smartphone markets in the region, ride-sharing executives are thinking big.
“Our goal is to replace private car ownership,” San Francisco-based Uber Technologies’ [UBER.UL] general manager for Vietnam, Dang Viet Dzung, told Reuters in an interview.
“If Uber is available everywhere, so cheap, so reliable, why do you need to buy a car?”
Uber charges 8,000 dong (27-36 cents) per kilometer compared with 11,000-15,000 dong for taxis in Ho Chi Minh City. The city’s taxi rates are more than double those in Bangkok, Manila and Jakarta, according to Vietnam’s Association for Consumer Standards and Protection.
Nguyen Tuan Anh, GrabTaxi’s general manager for Vietnam, said Vietnam’s young population - more than two-thirds of people are under 30 years of age - was “eager to learn new things”.
But he cautioned that many still yearned to own their own car regardless of the cheaper alternatives now available through ride-sharing.
“If our service is good enough to provide the convenience that surpasses the need for showing off, then they eventually may take it,” Tuan Anh told Reuters in an interview.
Both operators declined to reveal how many Vietnamese users they had because it could impact market competition.
Uber and Singapore-based GrabTaxi won’t get their own way in Vietnam as local outfits muscle in on the action.
Leading Vietnamese cab firms Mai Linh and Vinasun will soon launch smartphone apps, adding to those of Xe Cua Toi, LiveTaxi and iMove, which debuts this month.
“It will replace, in a couple of years, the conventional system of calling a taxi,” said iMove’s Truong Trong Hao.
But in an effort to gain an edge, the domestic players are tailoring their services to fit the Vietnamese market.
GrabTaxi has introduced a GrabBike motorcycle service, while Uber last month started accepting cash from Vietnamese to get around the lack of credit cards - only 2.5 million in circulation - following similar moves in India and Kenya.
Clear laws aren’t here yet, either. Uber isn’t illegal, but policymakers are working out how to regulate it.
Khuat Viet Hung of Vietnam’s National Traffic Safety Committee said smartphone apps were permitted to work with “commercial transport service providers,” but not offer rides themselves.
But the apps’ unhindered growth suggests that rule isn’t being enforced and authorities are warming to the technology.
(This version of the story corrects paragraph 2 to say Uber launched in Vietnam last year, not three years ago)
Editing by Martin Petty and Stephen Coates