65 per cent
Ola’s market share; Uber has the rest of rides Uber and Ola receives hasn’t fallen. Growth, however, has hit more realistic figures. According to Singh, while the industry was growing at 10-15 per cent on a monthon-month basis last year, growth has slowed to around 5 per cent today.
Ola claims that it has over 6,50,000 drivers signed up on its platform, across all categories — shuttle, cabs, autos and bikes. Uber, on the other hand, claims it has over 2,40,000 active driver partners on its platform in the country, but only offers cabs on its platform. While these numbers might be quite large, analysts say at any given point of time only 30-35 per cent of driver inventory is active.
The cut in driver incentives has largely been fuelled by investor pressure to conserve cash, but while Uber and Ola will continue to expand their services going forward, they will do so in a much more efficient manner. One of the key changes one might expect is a relatively smaller base of cabs but with far higher utilisation, ensuring drivers get adequate business.
The call to reduce driver incentives is also a precursor to an increase in fares for customers, as both companies set their sights on making profits. This will also help drivers, who have been complaining of inadequate earnings, make more money per trip and reduce their reliance on incentives. Experts says it’s a cyclical trend that’s seen in all such businesses.
“The future of our business depends on making driving with Uber the most attractive choice. Given the strong demand from riders, drivers across cities continue to join the platform to get entrepreneurial work at the tap of the app and we are committed to supporting them in this journey,” says an Uber spokesperson. Ola declined to comment for this story. The alarm bells are not ringing just yet, say analysts and industry watchers. However, it is to be seen how Uber’s global restructuring after the exit of CEO Travis Kalanick affects its India business. While Amit Jain, the head of Uber’s India business, has delivered results in just two short years, any lethargy from the headquarters could hurt the company’s India unit.
Further, Jain’s stellar performance in India has put him in the good books of Uber’s investors. As they now call the shots in determining the company’s future leadership team, Jain could very well be offered a global role at Uber. If this happens, it could have repercussions for the India business.
Despite Uber’s weakened position, Ola, quite uncharacteristically, isn’t planning any strikes just yet. A senior official at the company on the condition of anonymity says that the general consensus at Ola is that drivers will move to Ola organically as Uber implodes.
“Drivers of Uber will slowly start moving to other competitors. In India, of course, they will come to us. The reason is there will be a management shakeup, people will start feeling insecure and this will go down to the drivers,” says the Ola official. “We should just focus on our business, not grab business.”
Moreover, Ola’s largest investor, Softbank, has put its foot down, robbing the company of $2 billion in valuation when it invested $230 million at a valuation of $3 billion. The primary driver for the drop is said to be the company’s insatiable thirst for capital being spent on incentives, discounts and promotions. Over the past six months, however, the company has been reducing its burn rate and looking at more meaningful growth even at the expense of a little degrowth.