Indian car rental start-up Zoomcar sees Vietnam as a major Southeast Asian market to tap into growing demand for cars among its burgeoning middle class. Vietnam is expected to account for 10% of Zoomcar’s revenue in the next fiscal year, which translates to $8 million, said Kiet Pham, vice president and country manager of Zoomcar Vietnam.
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 about 1,000 cars for rent, which is 10% of its total worldwide number. To reach this number, Zoomcar offered significant rewards to car owners for listing their vehicles on its platform. An owner who signed up during the four-day vacation earlier this month received 3 million VND ($131).
Zoomcar is also ready to spend money to change the habits of Vietnamese consumers and familiarize them with car rental.
Kiet said the company is ready to spend $25 million to expand its presence in Vietnam. It has raised $207 million since its inception.
For Vietnamese users, despite being one of the leading car rental companies in India, Zoomcar is still a new brand as it has only been active in HCMC for four months.
Kiet said Zoomcar is betting big on Vietnam as the country is the fourth-largest car market (by sales) in Southeast Asia and only 5.7% of households had a car in 2020.
Falling motorcycle sales, expanding middle class and development of major infrastructure projects are expected to increase car use, he added.
Vietnam’s car rental market is expected to reach $550 million this year and will grow 10.9 percent annually over the next five years, according to data portal Statista. By 2026, it will reach $840 million with 8.7 million users.
Kiet said, “It’s the right time to enter the market. There is a lot of support for our entry.
The number of trips has doubled every month for the past four months, he said.
“These numbers exceed our original targets.”
Traditionally, customers must make a deposit of 15 to 20 million VND, present their family booklet, a vital identification document in Vietnam. Customers and rent a car for at least a day.
On Zoomcar, users are not required to post a deposit or documents and can rent for six hours.
But the 40% rental commission it charges discourages some car owners, who complain it’s too high.
Kiet defended it, saying it’s an appropriate ratio to ensure the company has enough resources to grow the market and bear operating risks so car owners don’t just list their vehicles and don’t care about customer reliability.
He also spoke of the low number of vehicles, saying only 50% 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 driving licenses (estimated at 3% of HCMC’s population) is also a challenge, he said.
The company, however, believes that car rental will become a future trend in Vietnam, as has happened in Singapore and the United States, he said.
The company hopes to expand to Hanoi this quarter, he added.