Singaporean firm’s taxi joint venture in Vietnam suffers losses

ComfortDelGro’s revenue in Vietnam fell to $3.3 million in 2018 compared to $6.8 million the previous year - Photo by VnExpress

This figure is mentioned in the latest financial statement published this month by local retail, motor vehicle and parts dealer Savico, the Vietnamese joint venture partner.

ComfortDelgro Savico Taxi has been in constant trouble in the last few years. After nearly ten years of operation, the joint venture had to restructure and upgrade its fleet to maintain an exploitation rate of 90 percent, which meant heavy investments.

However, just when it was becoming profitable enough to offset cumulative losses of the previous years, the joint venture met fierce competition from ride-hailing start-ups Grab and Uber.

Savico decided to close the taxi firm’s operations last March to preserve its capital. At closure time it had 352 cars but only 140 drivers.

Following the joint venture’s closure, ComfortDelGro’s revenue in Vietnam fell to $3.3 million in 2018 compared to $6.8 million the previous year, down by more than half.

ComfortDelGro’s Vietnam earnings now account for less than 1 percent of its total revenue. The firm also has business in Singapore, the U.K., Australia, China and Malaysia.

According to financial statements, ComforDelGro’s non-current asset value in Vietnam has also fallen from $12.8 million in January 2017 to only $4.8 million in 2018.

Although the Singaporean transport firm’s management did not give a reason for the fall, experts have not ruled out the possibility that it has already liquidated all its long-term assets in the joint venture and is waiting to complete dissolution procedures.

ComfortDelgro Savico Taxi, formerly known as Tourism Taxi Savico Enterprise, was established in March 2005 as a joint venture between Savico (40 percent) and ComfortDelGro (60 percent) – a leading public passenger transport operator in Singapore.

ComfortDelGro still owns a 70 percent stake in another local taxi firm called VinaTaxi, which takes up the third largest market share in the HCMC taxi market.

However, last November, its Vietnamese partner, the Transport and Industry Development Investment Corporation (Tracodi), withdrew its 30 percent stake from the joint venture, citing poor business performance.