Vietnam Car Rentals Market Outlook to 2030

Vietnam Car Rentals Market Overview

• The Vietnam car rental market, valued at USD 900 million, is driven by an influx of business travelers and rising domestic tourism. With increased demand from both leisure and business travelers, car rental companies are expanding their services across key cities. Additionally, the market's growth is supported by Vietnam's expanding infrastructure, including the improvement of airport services.

• The dominant cities in Vietnam's car rental market are Hanoi and Ho Chi Minh City. These cities attract a large number of tourists and business professionals due to their status as economic and cultural hubs. Hanoi, being the capital, and Ho Chi Minh City, the largest economic center, see higher demand for rental services due to their large populations, business centers, and international airports.
• In 2024, the Vietnamese government continues to implement its "Tourism Development Strategy 2030," which aims to make Vietnam a leading tourist destination in Southeast Asia. Part of this strategy includes enhancing transportation infrastructure, which directly benefits the car rental market. The government has allocated over $10 billion toward developing tourism-related transport networks, which will increase accessibility and further drive demand for car rentals in key tourist areas.

Vietnam Car Rentals Market Segmentation

By Booking Type: The market is segmented by booking type into online and offline categories. The online segment dominates due to the increasing internet penetration and the rise in smartphone usage across the country. Online platforms like Grab, Hertz, and local companies have significantly simplified the booking process, providing users with easy access to services.

By Rental Duration: The market is also segmented by rental duration into short-term and long-term rentals. Short-term rentals dominate the market, particularly among tourists and business travelers who require vehicles for a few days. The demand for short-term rentals is boosted by the growing tourism sector and an increasing preference for short, flexible rental periods, especially for leisure purposes.

Vietnam Car Rentals Market Competitive Landscape

The market is fragmented, with several players contributing to the competitive landscape. Major global brands like Avis and Hertz compete alongside local companies like Vinasun and Mai Linh. Companies compete on the basis of service quality, fleet size, mobile application offerings, and pricing strategies.

Vietnam Car Rentals Market Analysis

Market Growth Drivers

• Increasing Domestic Tourism: Vietnam's domestic tourism sector has been on the rise, driven by the government's focus on boosting internal travel. In 2024, the country is expecting over 120 million domestic tourists, which has directly led to a surge in demand for car rental services as more Vietnamese citizens seek flexible travel options. This growing preference for private vehicle rentals for intra-city and inter-city travel supports the car rental industry in both metropolitan and rural regions.
• Expanding Infrastructure Development: In 2024, Vietnam is set to invest over $8 billion in infrastructure projects, including highways and urban road expansions. The governments "Eastern North-South Expressway" is under development, expected to educe travel time across provinces and increase demand for long-distance vehicle rentals.
• Booming Corporate Travel Sector: Corporate travel in Vietnam is expected to rebound in 2024, with over 3 million business trips planned domestically, fueled by the expansion of sectors like manufacturing, technology, and services. As companies continue to expand operations across multiple regions in Vietnam, corporate demand for car rentals has also risen.

Market Challenges

• Limited Digital Infrastructure: While the car rental market in Vietnam is growing, digital infrastructure to support car rentalsespecially through online booking platformsremains underdeveloped. In 2024, less than 40% of car rental companies have fully optimized their online platforms for seamless customer experiences. This creates a gap in customer acquisition and service efficiency, particularly as tech-savvy consumers prefer digital solutions for booking services.
• Traffic Congestion in Major Cities: In 2024, major cities like Ho Chi Minh City and Hanoi continue to grapple with severe traffic congestion, with an estimated 10 million vehicles on the road in these cities combined, as per local transport departments. This makes driving in urban areas less appealing for tourists and corporate travelers alike. The congested road conditions often lead to reduced interest in car rentals, especially for self-driving options, impacting the sectors overall growth potential.

Vietnam Car Rentals Market Future Outlook

Over the next five years, the Vietnam car rental industry is expected to experience rapid growth, fueled by the expansion of tourism and business travel, as well as continued investments in infrastructure.

Future Market Opportunities

• Growth in Digital and App-Based Car Rentals: The future of market will see substantial growth in digital and app-based services. By 2029, over 70% of car rental bookings will be made through digital platforms, driven by an increased preference for convenient and tech-savvy solutions among younger travelers. This shift will be supported by the rise of integrated travel apps, which will allow users to seamlessly book rentals, accommodation, and other travel services on a single platform.
• Expansion into Corporate Long-Term Rentals: Over the next five years, corporate long-term rentals will become a dominant segment in the market. With over 5,000 new businesses expected to establish in Vietnam annually, companies will increasingly opt for long-term vehicle leasing instead of outright purchases. This trend will be driven by cost-efficiency, with businesses favoring flexible leasing options to meet their transportation needs without the burden of vehicle ownership.