Indian car rental startup Zoomcar eyes Vietnam as a major Southeast Asian market to take advantage of the rising demand for car ownership among its expanding middle class. Vietnam is set to account for 10 percent of Zoomcar’s revenues in the next financial year, which translates to $8 million, Kiet Pham, vice president and country director of Zoomcar Vietnam said.
In Southeast Asia, the company is focusing on Indonesia and Vietnam, and plans to invest $100 million in the two countries. In Vietnam, it has around 1,000 cars for rent, or 10 percent of its total global number. To achieve the number, Zoomcar has been giving out large rewards to car owners to list their vehicles on its platform. An owner who listed during the four-day holiday earlier this month received VND3 million ($131).
Zoomcar is also willing to burn cash to change Vietnamese consumers’ habit and make them familiar with renting cars.
Kiet said the company is willing to spend $25 million to expand its presence in Vietnam. It has raised $207 million since its establishment.
For Vietnamese users, though it is one of the top car rental companies in India, Zoomcar remains a new brand as it has only been active in HCMC for four months.
Kiet said Zoomcar is betting big on Vietnam because the country is the fourth biggest car market (in terms of sales) in Southeast Asia and only 5.7 percent of households had a car in 2020.
The dwindling sales of motorbikes, the expanding middle class and the development of major infrastructure projects are set to increase car usage, he added.
Vietnam’s car rental market is set to reach $550 million this year and will grow by 10.9 percent annually in the next five years, according to data portal Statista. By 2026, it will reach $840 million with 8.7 million users.
Kiet said: “This is the right time to enter the market. There is a lot of support for our entrance.”
The number of trips has been doubling every month in the last four months, he said.
“Those figures exceed our initial targets.”
Traditionally, customers have to make a deposit of VND15-20 million, submit their household registration book, a vital identification document in Vietnam. Customers and hire a car for at least one day.
On Zoomcar, users are not required to put down any deposit or documents, and can rent for six hours.
But the commission of 40 percent of rental it charges discourages some car owners, who complain it is too high.
Kiet defended it by saying it is an appropriate ratio to ensure the company has enough resources to develop the market and bear the risks of operation so that car owners only need to list their vehicles and not worry about customers’ trustworthiness.
He also spoke about the low number of vehicles, saying only 50 percent of registered owners make them available at a time, at a time when the number of renters is increasing.
The low rate of people with driver’s licenses (estimated to be 3 percent of the HCMC population) is also a challenge, he said.
The company believes however that car rental would become a future trend in Vietnam as has happened in Singapore and the U.S., he said
The company hopes to expand to Hanoi this quarter, he added.