The Future of Mobility: Why Long-Term Car Rentals Will Take Off in Vietnam

Car leasing – a popular trend in developed countries

Car leasing is not a new business model globally. This type of service has been around for decades, since cars became popular in developed countries such as the UK, US, and Germany. And it’s been growing stronger ever since.

Statistics from Fintech Market show that as much as 39% of new car sales in the US in 2021 were from leasing contracts. Meanwhile, according to Dreamlease, there are currently over 1.6 million people in the UK leasing cars, meaning that about 20-30% of new cars in the country are leased. In Asia, Japan and South Korea are exemplary countries that have witnessed the popularity of car leasing services, with a ratio of about 10-20% of new cars being leased.

According to experts, there are several reasons why a large number of consumers opt for leasing. 

Firstly, there’s the financial equation. Car leasing helps those with a need but insufficient savings to cut down initial costs as they don’t have to spend a large sum of money upfront. Lease payments are also typically more manageable for lessees as they are made in affordable monthly installments. Many leasing contracts also include maintenance and insurance costs, further reducing financial burdens during the vehicle’s use.

Secondly, flexibility is another advantage that makes leasing increasingly popular. Leasing packages tend to be flexible in terms of both time and vehicle type, including premium options that allow users to choose according to their needs and personal preferences. Once the contract ends, lessees can easily switch to a new car without the hassle of selling the old one.

“Those who enjoy new experiences and technology will prioritize the option of paying a monthly fee to ‘test’ the newest and most modern features on vehicles,” analyzed a car market expert.

Additionally, some surveys by AutoTrader indicate a growing environmental awareness among consumers. Through leasing, they can easily access green vehicles like electric cars without a substantial investment.

According to a report by Research and Markets, the global car leasing market is still growing strongly, projected to expand by $55.3 billion during 2023-2028, with a CAGR of approximately 9.24%.

Vietnam’s car leasing market: Anticipating an explosion

In Vietnam, the car leasing market is assessed to have ample room for growth and development. 

A report by the market research organization Mordor Intelligence Inc. revealed that Vietnam’s car leasing market reached a value of US$463.19 million in 2021 and is expected to grow to US$884.71 million by 2027, with a CAGR of over 13.82% estimated during 2022-2027.

Echoing this forecast, Mr. Dang Binh Minh, who has years of experience researching the car market, analyzed that leasing will soon explode and become a prominent trend in Vietnam, thanks to the confluence of several factors.

Firstly, Vietnam is one of the fastest-urbanizing countries, with a growing middle class. The country’s per capita GDP has surpassed $4,200 (in 2023), leading to increased spending power. 

Secondly, consumer thinking has evolved and become more open to flexible “ownership” options. Consumers, especially the youth, are increasingly prioritizing experiences and quality of life, opting for car leasing. The remarkable development of electric cars in Vietnam in recent years has also increased the demand for experiencing odorless, high-tech electric cars. 

Thirdly, the recovery of Vietnam’s tourism industry post-pandemic is considered a crucial factor in boosting car leasing services. Domestic and international tourists can use car rental services to travel between tourist destinations, airports, etc.

Fourthly, car leasing is also a preferred solution for many businesses due to its advantages, such as reducing initial investment, facilitating fleet renewal, and minimizing depreciation, maintenance, and insurance concerns.

The expert believes that while car leasing has been introduced in Vietnam in previous years, its scale was modest, and complex procedures hindered its potential. However, with the entry of the FGF electric car leasing model – a newly established company by Vingroup’s Chairman, Pham Nhat Vuong – the car leasing market will undoubtedly become more vibrant.

FGF not only offers flexible packages for short and long-term leasing, self-drive or chauffeur-driven options, but it is also highly regarded for providing reasonable prices and a diverse fleet, ranging from the affordable VF 5 to the luxurious VF 9. 

Moreover, for the first time in Vietnam, customers will experience a whole new style of car ownership, along with premium services: No fuel costs; No insurance or inspection fees; No smoke; No gas smell.

In fact, a large number of Vietnamese customers are interested in and eager to experience FGF’s novel services. In September 2024, just two months after its market launch, FGF signed long-term leasing contracts for 910 vehicles with nine partners across nine provinces and cities nationwide.

“Electric cars already have many advantages that attract consumers. With the unique FGF electric car leasing model, the young but promising car leasing market in Vietnam will be further boosted and witness robust growth in the coming years,” affirmed Mr. Dang Binh Minh.

TH (Tuoitrethudo)