Covid impact on Ola, Uber lower during second wave

The mobility sector is among the worst hit due to Covid-19; both Ola and Uber have lost revenue

The impact on app-based cab companies during the second wave of Covid-19-induced restrictions was lower as compared to the two-month lockdown period last year, with Ola faring better than Uber, according to new data. The mobility sector is amongst the worst hit due to Covid-19, and both Ola and Uber have lost revenue, something that has not been quantified before.

Monthly active users (MAUS) — a key metric for app businesses and one that companies guard closely — of Ola and Uber fell 25.2 per cent over March to May 2021 (lockdown 2), compared to a 44 per cent drop from March to April 2020 (lockdown 2), according to App Annie data, reviewed by Business Standard. Cab operations were suspended for 1.5 months in lockdown 1, but were allowed as essential services this time around. That said, bookings are down substantially.

A striking revelation is that Ola fared better than Uber. In March-may 2021, it’s active users fell 19.7 per cent as compared to Uber’s, which were lower by 30.7 per cent. Also, Ola has had 17 million higher active users on average consistently over the last 18 months. Both the companies have publicly claimed

Source: App Annie a dominant position in the past. That said, as of May, the gap had shrunk to 8.4 million active users. The figures include both IOS and Android app numbers.

Ola and the India unit of Uber did not respond to queries sent.

At the time of publishing of this report, 30 of the 36 states and Union Territories were under major to moderate restrictions, according to Moneycontrol Unlock tracker.

With the case-load falling after the first wave, the cab business picked up with the rise in overall economic activity. The MAUS graph shows uptick May 2020 onwards with peak activity recorded in March 2021, just before fresh restrictions were announced. The data show that March peak of user activity was 18 per cent lower than the activity in February 2020, the final pre-lockdown month.

Two things must be kept in mind while studying the data. One, Uber sold off its food delivery division, Uber Eats, to Zomato in January 2020. Since Uber lost some of the traffic that came for food-ordering, its app numbers are slightly lower.

“In one sense, Uber’s exit from food delivery in India came at a bad time. Food delivery has grown by leaps and bounds during the pandemic,” said Arvind Singhal, founder and managing director at Technopak Advisors, a business consultancy. In fact, Uber made the expensive acquisition of Us-food delivery firm Postmates in November last year, he added.

Secondly, both Ola and Uber have had to suspend shared rides. While that does not affect user activity — the same user would have taken a lone ride instead of “share” — it is likely to impact earnings. Shared rides are known to be more profitable for Ola and Uber.

Both Ola and the India unit of Uber have not filed FY21 financials with the MCA. Uber Inc said its March quarter revenue (global) declined 9 per cent.

Internally circulated, the figures have promoted action from investors. In March, it was revealed that Vanguard Group, one of the investors in Ola, had marked down its valuation to $3 billion from $6 billion earlier in June 2020. Uber stock, which fell 48 per cent in February-march 2020, however, doubled over October 2020 to April 2021 as the situation improved in most international markets.

Business loss has forced the companies to retrench staff and look for other avenues for sustenance. Uber let go 14 per cent of employees globally, including 600 in India, in May 2020. The same month, Ola fired a third of its staff.

Ola has shifted focus to its electric mobility venture, Ola Electric. In December, Ola said it was investing $327 million to set up the “world’s largest scooter manufacturing facility” in Tamil Nadu, with a production capacity of 2 million units of EV two-wheelers per year.