Uber reviews India leasing scheme as driver incomes drop

NEW DELHI: 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, people familiar with the matter told Reuters.

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 has used in other markets – but it suspended the scheme for a while in December after leasing just a third of that 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 (US$1,838) 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 1 rupee.

The incentives and, to an extent, the leasing scheme aimed at drivers without their own cars, boosted Uber’s driver numbers, helping it rapidly gain around 30 per cent market share.

Uber has faced challenges elsewhere in Asia, but the stakes are high in India’s US$12 billion taxi market, a key area after it exited China last year, and one where CEO Travis Kalanick has said it expects to be profitable soon. Uber has said its services are in 29 Indian cities and it has more than 250,000 drivers on its platform, but it lags Ola, which says it operates in more than 100 cities with about 550,000 drivers.