1. The urban population is rapidly increasing due to the number of immigrants, economic reforms as well as higher living standards
The six largest urban agglomerations in Vietnam include Hanoi, Hai Phong, Da Nang, Bien Hoa, Ho Chi Minh City and Can Tho. In the last decade, the Vietnamese economy has experienced consistent economic growth with about 6% increase in GDP from year to year. The Vietnamese government expects to nearly double the country’s GDP per capita by 2030 and increase it eightfold by 2050.
2. Increasing tourism, growing middle class and improving infrastructure are driving the growth in Vietnam car rental market
- The market for car rentals in Vietnam is expected to expand as FDI in 2022 is estimated at 13.5% over the previous year. This is the highest amount of foreign direct investment in the past 5 years.
- Vietnam is a popular tourist destination, and as more tourists visit the country, the demand for car rental services increases. This is especially true in the more rural areas of the country, where public transportation is limited. Since reopening its borders and lifting most Covid restrictions, Vietnam has earned high revenues from tourism.
- As more companies conduct business in Vietnam, the number of business travelers visiting the country is also increasing, which is boosting the car rental market. As of July 2020, Vietnam’s 30-day single entry e-Visa program is available to nationals of 80 countries.
- The Vietnamese government has been actively promoting the car rental industry, which has helped to create a favorable environment for the growth of the market. From March 2022, the registration fees for battery-driven electric cars are to be 0% within the next three years.
- The rising middle class in Vietnam has more disposable income to spend on luxury items such as car rental services, which is driving the market’s growth. By 2030, there will be about 48 Mn Vietnamese people earning over $20/day. Compared to Asia, Vietnam is among the fastest growing in terms of population earning more than $20/day in constant PPP.
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3. Limited availability of cars, hidden costs, quality of vehicles and poor customer services are problems faced by consumers in Vietnam car rental market
- Limited availability of cars or vehicles during peak travel season and holiday periods can cause frustration for customers.
- Some car rental companies might charge extra fees, such as insurance, fuel, or parking charges, that are not clearly stated in the initial quote.
- Some customers might be dissatisfied with the condition and maintenance of the vehicles, leading to problems during their trips.
- Poor customer service, such as slow response times, unhelpful or untrained staff, or lack of clear communication can cause frustration for customers.
- Limited availability of cars or vehicles during peak travel season and holiday periods can cause frustration for customers.
4. Smart city mission 2025 will help in fastening the process of digitalization of the economy and providing business opportunities to car rental companies in Vietnam
By 2025, fiber optic broadband network infrastructure will cover over 80% of households in urban areas, universalize 4G, 5G mobile network services and smartphones. By 2030, universalize 5G mobile network services, and the proportion of adult population in urban areas with electronic payment accounts will be over 80%.
This will help car rental, ride hailing, sourcing, leasing and self-drive rental companies to digitize their operations and operate efficiently in the country. The lease/contract signed for leasing and self-drive car rental rentals could be done online. It will also encourage people to opt for digital payments more.
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