Luxury car rental investment boom

Expensive cars such as Limousin, BMW, Lexus... latest models are being imported to Vietnam by a company that spends 50 billion VND to invest in luxury car rental services for VIP customers and high-class businessmen.

The market for importing new luxury cars for rental business is quite vibrant, from a few cars to dozens of cars. Previously, only 5-star hotels pursued this model, but now 3-4 star hotels are also joining the game, at the same time, the market has a new group of emerging investors not in the hotel tourism industry.

A representative of a chain of 7 3-4 star hotels distributed throughout the Northern, Central and Southern provinces said that they had invested in 2 BMW cars worth nearly 3 billion VND each to serve VIP guests and internal operations for the group's senior management. This person further revealed that because the initial investment was quite expensive and the depreciation time was fast, the company only piloted it for 4-star hotels with high sales in the entire system.

For many years, 5-star hotels located in Districts 1 and 3 of Ho Chi Minh City have also invested in 4-seat and 7-seat Limousines (Mercedes) to pick up and drop off guests from business groups and international investors, but the number of vehicles is quite limited.

Meanwhile, the list of investors specializing in this business model in major cities of Vietnam records many names such as: Dong A, Huy Khang Thinh, Chau Au, Ba Li... There are businesses that after 5 years of development have become the market leader, increasing the number of luxury cars to 50, including all types from Mercedes to BMW, Audi, Lexus...

A company has just revealed that it has invested 50 billion VND in new Mercedes and BMW models to bring to Vietnam for business in Ho Chi Minh City. Photo: Vu Le

Most recently, on April 25, Tan Son Nhat Airport Services Joint Stock Company (SASCO), a member of Vietnam Airports Corporation, and its partner Five Star Limousine SG announced a super luxury car rental service for VIP guests at the airport.

Five Star Limousine SG signed a 5-year exclusive contract with SASCO to develop the latest high-end and luxury car rental service on the market such as Mercedes, BMW, President Limousine... to pick up and drop off passengers at the airport. The total number of cars of this unit as of June 2016 is 15 and is expected to increase by 30-50 cars from 2017 onwards.

This special alliance differs from the rest of the market by providing a full service package: new luxury cars, drivers who can communicate in foreign languages, pick up and drop off at many different locations in the airport such as the domestic terminal, the international terminal, right at the arrival and departure terminals, at the priority lane or right at the foot of the plane. The vehicles are fully equipped with wifi, towels, candy, drinks... In addition, customers also have their time shortened when completing immigration procedures at the airport because these services will be performed more quickly and professionally.

Although the model of importing luxury cars for rental is welcoming many new groups of investors, the potential customers of this niche market have remained almost unchanged over the past decade. They are famous individuals, senior leaders of multinational companies, large-scale domestic enterprises, and rich people (billionaires, leaders of investment funds) coming to Vietnam to explore the market.

Luxury car rental prices vary widely, depending on the car model and year as well as the accompanying services. If you rent a new luxury car with a full service package within Ho Chi Minh City, the cost will range from 5 million VND to 11 million VND for 100km within 8 hours of service. Meanwhile, if you rent more frequently and go further, the price is negotiable.

TMG Hospitality Training Director, Master Trang Minh Ha said: "Investing in luxury cars for rental business is a rather narrow market and requires corresponding 5-star service quality to be able to compete. Because the target customers of these services are mostly rich people, and extremely demanding."

According to Mr. Ha, the most difficult thing in this business is to train drivers with 5-star service, steady and safe driving skills, and good foreign language skills because the rate of international customers using this service accounts for over 50%. The second challenge is that the business must have a stable source of customers using the service to quickly amortize the extremely expensive investment (luxury cars cost at least 2.5-3 billion VND and at most 6-7 billion VND per car).

This expert confirmed that since 2003, this service has appeared in 5-star hotels in Ho Chi Minh City, but today, with the rapid integration of Vietnam, more and more businesses outside the hotel and tourism industry are entering this niche market.

Chairman of the Vietnam Sales and Marketing Directors Club, Tran Ngoc Anh analyzed that the luxury car rental investment market with full service is a potential investment channel in the near future.

Mr. Ngoc Anh gave 3 reasons why this market is heating up. Firstly, the group of rich people and businesses wanting to build a professional, classy image in the country is increasing, so the demand for super luxury car services is also expanding.

Second, Vietnam is deeply integrating with the region and the world and will welcome a wave of investment or investment exploration from rich people around the world such as billionaires, investment funds, senior leaders of multinational corporations... all of whom are potential customers using this service.

Third, luxury car renters get many benefits: they can satisfy their need to assert their status, save on expensive initial investment costs (several billion VND for a luxury car) in the context of the upcoming increase in car import tax, and access a community of successful people of the same class.

According to VNE