Why are you paying higher fares for your Ola, Uber rides
The growth in Ola and Uber India's core business of ride-hailing has started resembling rush hour traffic crawl. Industry analysts and company insiders said the number of daily rides has inched up by just 4% — from 3.5 million to 3.65 million — in the past six months. For consumers, this gets reflected in far longer wait times — from an average 2-4 minutes two years back to 12-15 minutes now — and higher fares, around 15-20% in non-peak hours in major cities.
Savage cuts in driver incentives leading to supply shortage of cabbies is the prime reason for this low single-digit growth in a business that had seen growth of 20% in 2018, 57% in 2017 and 90% in 2016 (all data is for Ola and Uber India). The incentives were cut by 40% over the past one year. This resulted in several cab drivers defaulting on their loan payments.“The market is facing a saturation for point-to-point cab-hailing,” said Jaspal Singh, cofounder, Valoriser Consultants, a transportation sector focused consultancy.
Falling commercial vehicle registrations too confirm the slow crawl in Ola and Uber India’s business. For example, in Maharashtra, 66,683 tourist cabs, which largely work with Ola and Uber India, were registered in 2017-18, but the number fell to only 24,386 in 2018-19, according to the state transport department website.
Betting on other businesses
Both Ola and Uber are betting on other businesses to grow. “Ola is betting big on electric mobility for two-wheeler and three-wheeler segments to bring in affordability along with pushing self-drive two-wheeler segment through its bet on Vogo. It is also ramping up its self-drive and rental verticals even as it expands internationally and makes inroads into financial services,” said a top executive at Ola, requesting anonymity. (Pic: Vogo/Facebook)
Meanwhile, Ola has separately raised more than Rs 400 crore from Tiger Global, Matrix Partners, and Ratan Tata for its Ola Electric business. Its American rival Uber, which recently went public, has been under investor scrutiny for piling up losses globally. In India, which is one of the strategic growth markets for the company, it is now looking at its food delivery platform UberEats, corporate and rental businesses and bike rentals.
Accepting the slowdown
Uber’s CEO Dara Khosrowshahi has acknowledged slowing growth in Uber’s core ride-hailing business and said this will account for less than 50% of Uber’s business transactions in the near future. “With Uber and Lyft IPOs and losses under market scrutiny, there is pressure on both Ola and Uber India to become more cautious on their cash burn and explore sustainable modes of business,” said an investor in a ride-hailing firm. (Text: Aditi Shrivastava)