Ola and Uber cab supply declines 25% in Jan-March
BENGALURU: Ride-hailing services Ola (ANI Technologies Pvt. Ltd) and Uber Technologies Inc are facing a crunch in supply of cars, with the number of vehicles affiliated to their platforms dropping by almost 25% in the March quarter from the preceding three months, according to a report by RedSeer Management Consulting Pvt Ltd.
The report suggests that cab supply peaked in the December quarter since January last year to approximately 500,000 vehicles, before plummeting to about 380,000 vehicles in the March quarter, largely because of a fall in incentives for drivers, prompting them to either explore other driving jobs or quit entirely.
“This trend was precipitated largely by continuously dropping incentives and driver incomes. Drivers who left the online platforms either shifted into other (offline) driving jobs or changed professions entirely.”
To be sure, the numbers claimed by Ola and Uber are significantly higher than RedSeer’s. Both companies claim to have about 5-6 million cabs each affiliated to their platforms. But it is not clear how many of these cabs ply on a regular basis.
Scores of drivers in Bengaluru and Delhi, two of the biggest markets for the ride-hailing companies apart from Mumbai, hit the streets in February and March to protest against the sharp fall in incentives, which, they claimed, had taken a toll on their livelihood. The protestors also resented constantly-changing incentive structure of the firms.
Both Ola and Uber had showered the drivers with money over and above the fares to build a large supply of cars and earn their loyalty.
Both have been cutting down on such spends after scaling up the businesses, as they aim for profitability.
While the protests have since been called off, the strikes highlight the flaws in these companies’ business model, Mint reported on March 6.
While the asset-light model of these cab-hailing services has merit, the strikes by drivers over incentives, their key attraction to list on such platforms, mean that these businesses cannot afford to rub the dissenters—car and fleet owners—the wrong way.
Uber India president Amit Jain said in a March interview that the strike was the work of a “small number of individuals who do not represent the majority of the driver community”.
“There is this mix between organic and incentives. Incentives might have come down, but what a driver partner takes home is organic money plus incentives. ... You have to have an initial set of supply. Over time, when demand catches up, the organic earnings become sustainable for a driver partner,” Jain had said.