Driv­ers re­turn­ing ve­hi­cles af­ter the scal­ing back of in­cen­tives

New Straits Times - - Business -


GLOBAL ride-hail­ing firm Uber Tech­nolo­gies is re­think­ing its car leas­ing strat­egy in In­dia, its sec­ond-big­gest mar­ket, as driv­ers have re­turned dozens of leased cars early af­ter the com­pany cut in­cen­tives, said peo­ple fa­mil­iar with the mat­ter.

Uber had planned to buy 15,000 new cars last year and lease them out in a bid to at­tract more driv­ers — a strat­egy it had used in other mar­kets — but it sus­pended the scheme for a while in De­cem­ber af­ter leas­ing just a third of the to­tal.

Af­ter burn­ing through mil­lions of dol­lars over three years in a bat­tle for mar­ket share with lo­cal ri­val Ola, backed by Ja­pan’s Soft­bank, Uber has cut the in­cen­tives it gives to driv­ers and raised the fares it charges pas­sen­gers.

The in­cen­tives — from free smart­phones to cash bonuses worth as much as dou­ble a day’s fares — meant driv­ers could earn as much as 120,000 ru­pees (RM8,142) a month.

Those in­cen­tive pay­ments have been pared back, in some cases to as lit­tle as 10 per cent of fare in­come. Ride fares have risen to 1.5 ru­pees per minute of travel from one ru­pee.

Sources said Uber mis­cal­cu­lated the im­pact that the re­duced in­cen­tives would have on driv­ers’ earn­ings, espe­cially those mak­ing lease pay­ments.

At an open meet­ing for staff 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.

Leas­ing is only a small part of Uber’s over­all sup­ply in In­dia, but is seen as a way to lock driv­ers on to its plat­form for longer, and stop them switch­ing to Ola. Reuters


Uber Tech­nolo­gies has burned through mil­lions of dol­lars over three years in In­dia in bat­tle for mar­ket share with lo­cal ri­val Ola.

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