Uber reviews India leasing scheme as driver incomes drop: Sources
Ride-hailing firm Uber Technologies is rethinking its car leasing strategy in India, its second-biggest market. This is because drivers have returned dozens of leased cars after the company cut incentives, people familiar with the matter said. Uber had planned to buy 15,000 new cars last year and lease these out in a bid to attract more drivers — a strategy it has used in other markets — but suspended the scheme for a while in December after leasing out only a third of the total.
The incentives — from free smartphones to cash bonuses worth as much as double a day’s fares — meant drivers could earn as much as ~1,20,000 a month. Those incentive payments have been pared, in some cases to as little as 10 per cent of the fare income. Ride fares have risen to ~1.5 per minute of travel, from ~1.
The incentives and, to an extent, the leasing scheme aimed at drivers without their own cars, boosted Uber's driver numbers, helping it rapidly gain around 30 percent of the market share.
It has faced challenges elsewhere in Asia but the stakes are high in India’s $12-billion taxi market. The market is a key after it exited China last year, and one where Chief Executive Officer Travis Kalanick has said it expects to be profitable soon.
Uber has said its services are in 29 Indian cities and has more than 250,000 drivers on its platform but it lags Ola, which claims to operate in more than 100 cities, with about 550,000 drivers.
Two people with knowledge of the matter said Uber miscalculated the impact the reduced incentives would have on drivers’ earnings, especially those making lease payments. At an open staff meeting in December, around the time the incentives were being reduced, Uber’s India chief Amit Jain said the buying-for-lease scheme was being temporarily suspended while the company evaluated its leasing strategy, one of the sources said.
Uber did not comment on Reuters queries related to Jain's announcement or the impact of the incentives cuts on its leasing programme.