Indian self-drive car rental service withdraws from Vietnam

After entering Vietnam for nearly 1.5 years, the self-driving car rental app ZoomCar from India announced that it would stop operating from May 24.

The information was sent by ZoomCar to its car owners on the afternoon of May 23. The reason given was that "the business market conditions in general and the self-drive car rental service in particular are facing many difficulties and are expected to continue to be complicated in the near future".

Mr. Kiet Pham, CEO of ZoomCar Vietnam, confirmed this to VnExpress but did not comment further. In the announcement, the platform pledged to fulfill its obligations to all customers, car owners and supplier partners in the coming time.

Specifically, for customers, the application and website will stop accepting trips from 0:00 on May 24. Trips that have been confirmed before this time and have an end time before 23:59 on May 28 will be served normally. Trips that have an end time after 0:00 on May 29 will be canceled.

For car owners, Zoomcar said it will fulfill payment obligations for rides as usual until June 30. Zoomcar Vietnam's technical team will contact car owners separately to arrange a schedule to collect the company's equipment installed on the car. As for ZoomCar suppliers, the company said it will contact each party to agree on a specific plan.

Mr. Kiet Pham, Country Director of Zoomcar Vietnam. Photo provided by the company — Mr. Kiet Pham, Country Director of Zoomcar Vietnam. *Photo provided by the company*

Founded in 2013 with headquarters in Bangalore (India), ZoomCar operates services in 31 cities in India, Indonesia, Egypt and Vietnam. The platform officially launched services in Ho Chi Minh City in early 2022, specializing in renting cars for self-driving users. Cars on the platform are provided by car owner partners, under a contract to share commissions on each booking.

ZoomCar had planned to invest $25 million in the Vietnamese market, with $8 million for the first fiscal year. The platform penetrated by "burning money" on promotions, offering big discounts to customers and generous rewards to car owners. Therefore, in the first phase after 4 months of penetration, they had about 1,000 cars on the platform.

In addition to discounts, in the initial launch phase, ZoomCar delivers cars to customers for free, without requiring a deposit or keeping hard copies of identification documents. To "recruit" car owners to join the platform, they offer weekly and monthly bonuses if they have enough bookings and hours to put their cars on the app for customers to rent (also known as "hanging cars") at a minimum. The company also directly purchases car body insurance for car owners.

However, the incentives gradually decreased after the initial period. ZoomCar stopped the delivery service after collecting fees and only restored it less than 2 weeks before ceasing operations in Vietnam. The service's call center, instead of operating 24/7, only operates until 8pm every day. Renters receive fewer promotions and car owners must voluntarily buy hull insurance and the company will reimburse them monthly if the car is "suspended" enough according to regulations.

Mr. Ky (District 8, Ho Chi Minh City), a ZoomCar car owner partner since March 2022, was surprised by the news but recognized that the opportunity to make money from this application has decreased significantly in the past half year. "The 40% discount policy is high, while to receive additional bonuses requires large monthly revenue, often having to 'hang up' the car continuously and having a lot of customers to be able to achieve it," Ky said.

According to this car owner, the period when he had the most customers was also concentrated in the first half of last year, when the economy was still bright. "In the first half of 2022, customers rented cars for weekend trips, and during the week, real estate agents hired them to take customers to see land around Ho Chi Minh City, and insurance agents hired them to gain credibility to close contracts. Meanwhile, from the beginning of the year until now, the economy has been gloomy, making it much harder to find a ride," Mr. Ky added.

In an interview with VnExpress in April 2022, ZoomCar Vietnam CEO Kiet Pham explained that the 40% discount is reasonable because resources are needed to develop the market, take responsibility for risks and operate the system. According to Mr. Ky's observation, some car owners choose to accept the initial cooperation to get customers and then leave ZoomCar and rent directly.

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