Taking the Uber penny
ASKED if running an Uber taxi would be a good business, we were a bit flummoxed for an answer at Wheels.
We warned back in 2014 that ride hailing apps will change the metered and mini-bus taxi industries, and correctly predicted the business model is better suited at subsiding the cost of a single car than earning income with it. For in taxis as in trucks, transport is all about economies of scale and the transporter with one vehicle is destined for bankruptcy.
Since then, metered taxi drivers have been fighting Uber drivers locally while passengers are complaining they have to pay steep cancellation fees when the Uber driver is at fault.
In the U.S. Uber drivers have now twice sued the ride hailing company for its “deceptive advertising” (read blatant lies) and was awarded multi million dollars in recompense.
Our main worry about Uber is that the company can and have dropped drivers’ fares without notice, which is why U.S. drivers who once made $40 an hour now makes $12,50, and have to work 18 hour days in the hope of qualifying for Uber’s small carrot, a $500 bonus for doing 120 trips a week.
A new study by Oxford University also shows where Uber appears, new driver jobs are created, forcing the average income of all taxi drivers down by 10%.
But passengers who have to get somewhere do not care.
In South Africa, an Uber taxi is several times cheaper than a normal metered ride, even in “peak demand” times and for the most part, the clean, safe vehicles arrive on time, which is to say within a few minutes.
So Uber will keep on growing — creating business opportunities for entrepreneurs who want to run a fleet of Uber cars.
For daring drivers, Uber has partnered with Wesbank to provide full maintenance leases that will see a driver who travels about 5000km a month pay R1 710 per week or R6 840 per month inclusive of insurance and tyre wear according to Uber.
To qualify for the lease, a driver does not need to meet any of the traditional credit ratings, instead a driver has to get at least a 4.70 rating from the passengers and carry 1 000 fares over three months.
Uber has also announced that Hertz, Europcar, Pace and Fleet Data Technologies will also be renting approved vehicles to prospective drivers from R5 600 per month and R0.45 per km travelled on a short term basis. But let the leaser beware, for if the stories from the U.S. show one thing, its that the sands at Uber is always shifting.