Vietnam Car Rental Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

Vietnam Car Rental Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The Vietnam Car Rental Market is valued at USD 463.19 Million in 2021 and is expected to reach USD 884.71 Million by 2027 registering a CAGR of over 13.82% during the forecast period, 2022-2027.

The COVID-19 pandemic has caused a significant shift in how individuals travel. People are starting to prioritize personal mobility more than ever before as social isolation becomes the new norm. Additionally, car rental businesses see this situation as a chance to expand. Car rentals proved to be a more advantageous option than ride-hailing and a speedier, more cheap way to get a car, providing a secure replacement for personal transportation. Due to behavioral changes resulting due to pandemic-driven transition, the car rental market in Vietnam is poised to grow in the coming years.

Over the long term, with the rapid urbanization and rise of the middle class in Vietnam, car rental is expected to become one of the best-known services available in the urban transportation industry for local use, airport transportation, and out-of-town travel. The Vietnam car rental market has grown quickly as a result of the internet's increased penetration and the organised sector's steady growth.

Spending among middle class people increased as a result of accommodating financial conditions, strong infrastructural development, and an improving business climate. Additionally, the market has experienced significant expansion as a result of the frequent investments in technology and the investments made by large corporations.

Key Market TrendsIncreasing Investments by Foreign Players is Pushing Demand for Car Rentals

Up until 2022, the car rental market in Vietnam was diverse due to a variety of rental durations, rental days, typical rental lengths, and other factors. More specifically, the market would provide several rental alternatives such as daily, overnight, for vacations, and a variety of options based on distance (kilometers). The self-driving services assist make full use of idle vehicles, link car owners and clients with simple and flexible procedures, and have increased demand in Vietnam's car rental sector. Additionally, businesses and apps that link car owners and customers have made the procedures simpler, hence improving the offerings.

The Vietnamese government regulated imports of cars starting in January 2018 by introducing a number of laws on car assembly, manufacturing, importation, and warranties. Additionally, the government has created a number of policies to promote foreign travel, which will allow the industry participants to tap into the unrealized potential that, if realized, would make Vietnam a top location for car rentals.

The market for car rentals in Vietnam is expected to expand due to FDI expansion that will continue luring more and more foreign workers. Also, there is significant expansion in the middle class. Younger people tend to place a higher value on experiences and quality of life than they do on saving up to buy expensive cars and large homes, thus they are more likely to rent cars. In addition to having one of the world's greatest growth rates and enticing corporate markets, Vietnam is a well-known travel destination in Southeast Asia. Combining these elements will make Vietnam an excellent possibility.

Inbound tourists and emigrants have had it easier to drive legally in the country since 2014. This will continue to be a factor influencing car rental performance.

In addition, the tourism industry in Vietnam is expanding, which has a positive impact on car rentals. The rise in Chinese and South Korean visitors has contributed to the increase, accounting for 48% and 34% year-on-year growth, respectively.

Furthermore, the 15-day visa-free policy for citizens of France, Germany, the United Kingdom, Spain, Italy, and Belarus has resulted in increased investment in air travel infrastructure. Tourists prefer to use car rental services when travelling to and from popular destinations, as well as when travelling to and from airports.

Technological Advancements are to Drive the Market Expansion

The market has transformed and experienced tremendous growth over the last two years, both in terms of users and service providers. Increased air travel for both business and pleasure has significantly increased the demand for car rentals.

The acceleration in growth can be attributed to rising business travel demand, which is being supported by an increase in internet and mobile bookings. Strong demand for chauffeur-driven cars in important cities like Hanoi and Ho Chi Minh City significantly boosted market income. Additionally, the improvement of airport infrastructure, an increase in passenger traffic at airports, and an increase in domestic and international tourism were cited as the main factors contributing to the expansion of on-airport car rental revenue.

It is anticipated that car rental companies would use environmentally friendly technologies by introducing electric vehicles. To compete with cab aggregators like Grab, which entered the market with a novel business strategy connecting independent contractors with potential clients, companies are expected to release smartphone apps. Rental car companies might compete on pricing, discounts, and special offers. Due to the widespread use of the internet and the rise in highly convenient cellphones, the client base has been expanding. To improve convenience, some automobile rental companies, including Vinasun, Hertz, and Avis, have switched to smartphone apps.

Competitive Landscape

Vietnam car rental market is a fragmented market with major players including, Avis Budget, Hertz, Enterprise Holdings, Vinasun, Mai Linh, and VN Rent a Car. The major players are actively expanding in Vietnam's major cities like Ho Chi Minh and Hanoi.

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