Vietnam’s Xanh SM already rivals Grab, one of Southeast Asia’s predominant ride-hailing apps, in its own country. But Pham Nhat Vuong and his conglomerate, Vingroup, hope to bring their app to the wider Southeast Asian region.
A RIVAL TO WATCH
A notable difference between Xanh SM and Grab is that the former has a fleet of vehicles that it rents to its drivers. Grab, on the other hand, requires its drivers to own cars individually before operating. Xanh SM took to the streets in April last year and uses Vinfast vehicles, Vingroup’s own EV subsidiary. This also makes them a “greener” alternative to Grab.
“Xanh SM’s long-term objective is to become one of the leading providers of electric mobility solutions in the region,” wrote a Xanh SM representative to Al Jazeera.
Xanh SM currently holds a fleet size of 20,000 cars and 60,000 motorcycles, all in the brand’s signature mint blue color. In its first 7 months of operation, Xanh SM had already captured 18.17 per cent of Vietnam’s ride-hailing market. This placed them second in market share, after Grab, and before Gojek. In light of the company’s rapid growth, Xanh SM has signed on to buy 14,600 more EVs from its sister company.
STRATEGIES FOR GROWTH
Experts like professor of Southeast Asian politics and security issues, Zachary Abuza of National War College, have commended Vingroup for their strategy to use Vinfast and Xanh SM in tandem. Xanh SM not only receives substantial support from Chairman Vuong, but from the Vietnamese government as well.
“I think that it’s quite smart what they’re doing with the taxis,” he said in a statement to Al Jazeera. But this strategy is not without fail, as Abuza noted that Xanh SM’s reputation as Vietnam’s flagship ride-hailer could be its downfall. “The government has this vested interest in them staying alive, which allows them to do very risky things, kind of creating this moral hazard knowing that the government will ultimately bail them out.”
A VinGroup representative, however, argued that the conglomerate does not “receive any special rights nor privileges” from the government.
Abuza also noted that expanding operations and services internationally could prove expensive for Xanh SM. On top of the usual costs for overseas expansion, the country will need to face the lack of charging infrastructures in the region.
Despite this, Vuong and his group are determined to establish both VinFast and Xanh SM as top brands in Southeast Asia’s automotive industry. Vuong was quoted to have said that he will continue to invest in his auto ventures “until [he runs] out of money.”
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