Many Vietnamese are buying new cars financed by soft loans widely offered by local banks, reflecting demand for serviced cars, especially Uber, as they find joining the U.S-headquartered app-based car service provider will give them a good source of income.
Uber, which connects passengers and drivers via a smartphone app, started offering services in Vietnam on July 31, with rides now available in both Hanoi and Ho Chi Minh City.
Customers use the Uber app on their smartphones to request rides and track their reserved vehicle's location.
Uber riders will be informed of the fare and ETA (estimated time of arrival) before they get in the car, and the complete fare is automatically billed to the customer's credit card at the end of a ride.
The transport firms that own the cars will receive 80 percent of the payment, while 20 percent goes to Uber.
Many banks told Tuoi Tre (Youth) newspaper that they are also promoting car loans, as though the lending is not as high as it was in the past, credit for car purchases is still more profitable than that for enterprises.
Many automobile trading companies said the number of cars sold during the first ten months of this year rose sharply against the same period last year, especially in October.
Moreover, the majority of new car purchases were funded by money the buyers borrowed from banks, they told Tuoi Tre.
Phan Duong Cuu Long, general director of Saigon Ford, said the company sold 180 vehicles in October, up 15 percent month on month and 25 percent year on year.
Nguyen Thi Quynh Nhu, deputy general manager of the Toyota Ly Thuong Kiet dealership in Ho Chi Minh City, also said it has sold an average of 150 vehicles per day in the year to date, an increase of 20 percent over the same period last year, and of which about 30 percent were financed by bank loans.
A leader at local lender Sacombank said the bank's auto loans have risen 40 percent from early this year.
New cars, new business opportunities
Having just completed the procedure to buy a 1.5L Ford Fiesta worth nearly VND700 million (US$31,500), Ngo Minh Cuong from District 7, Ho Chi Minh City told Tuoi Tre that in addition to serving individual needs, he will also join the Uber team for evening drives to gain access to potential customers of the bank he is working for.
With a VND450 million ($20,270) loan in seven years at preferential rates for bank employees, each month Cuong needs to pay about VND8 million in principal and interest, which he considered "reasonable.”
Meanwhile, instead of spending money buying an imported SH 300i scooter priced at VND270 million ($12,150), N.V.T. from District 11 said he has sought an additional loan to buy a Kia Morning sedan as a serviced car.
According to the automobile trading companies, there was a significant number of customers buying cars for use for both personal needs and leasing it to car service providers like Uber.
According to T., with VND120 million ($5,400) available and an additional VND240 million ($10,800) loan, he has to pay VND6 million in principal and interest every month.
He added that he has hired a driver to drive the sedan for a car service provider, earning VND1-1.2 million daily.
After setting aside the money for paying the driver and repaying the bank loans, T. can still earn a good amount of profit, he added.
A salesman for an automobile trading company said he and the other 20 counselors can sell an average of two to three cars each month to customers who buy the cars to lease them out.
Last month he sold five cars to those purchasing them for that specific purpose.
A leader in Truong Hai Auto JSC told Tuoi Tre that 200 out of 1,000 Kia Morning sedans its customers bought in October will be used for leasing to the Uber service, which, according to him, “is a surprising figure.”
A representative of the Kia auto showroom on Nguyen Van Troi Street, Ho Chi Minh City told Tuoi Tre that there were some customers buying 3-5 cars at the same time, and there were even some buying 10 automobiles at once with bank loans to lease to Uber.
Dinh Thi Le, director of a transport cooperative with 500 members in the city’s District 8, said the number of businesses registering for Uber has consecutively increased in recent months, rising 30 percent month on month in October.
According to the automobile trading companies, the rise in car sales is also triggered by many taxi firms having started a new business cycle to renew their teams, which often takes place once every 7-8 years, and the rising number of car buyers who want to join conventional taxi businesses.