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Business News

Ola, Uber see rides rise fourfold in 2016: report

New Delhi: Ride-hailing services Ola and Uber together clocked a nearly fourfold increase in the number of rides booked through their platforms in 2016 from a year earlier, according to a report by market research and advisory firm RedSeer Management Consulting Pvt. Ltd.

Ola (ANI Technologies Pvt. Ltd) and Uber Technologies Inc, together completed about 500 million rides in 2016, as against about 130 million rides the year before, according to the study. While Ola and Uber did not comment on the numbers, industry and company executives said Ola clocked about 6 million weekly rides on an average between September and December last year across its offerings of cabs, autorickshaws and shuttle buses.

Uber India president Amit Jain said in an interview in September that Uber’s completed trips had risen from 1.6 million in January 2016 to 5.5 million at the end of August.

Mint could not independently ascertain the number of rides clocked by Uber.

“One of the big things which happened was ride sharing. That was one of the fastest growing sections within the overall cab aggregator segment. Since the costs came down, even people who could not afford a cab, started getting one. The second big trigger was aggressive marketing in cities beyond the top three markets, which are Bengaluru, Delhi and Mumbai,” said Anil Kumar, chief executive of RedSeer.

According to industry executives, Ola was a clear leader until late 2015, when Uber turned on the heat with reduced fares and cash payments.

Jain, a former Rent.com executive who assumed charge of Uber in India in June 2015, said in the September interview that Uber had clocked 165,000 trips a week in January 2015. This implies that Uber grew 33 times in the 20 months between January 2015 and August 2016.

“Uber is growing in India by investing in engineering and technology to ensure we continue excelling where it matters, such as delivering the best experience to riders and drivers and ensuring that cars arrive quickly and reliably. We are delighted to see how ride-sharing is benefiting riders, drivers and cities across India,” an Uber spokesperson said in an email response.

An Ola spokesperson cited several third-party reports published in 2015 and one published in May 2016 to claim that Ola “consistently serves more than 78% cab users in India. Ola’s monthly active users is at least 70% more than Uber’s monthly active users consistently.”

The online ride-hailing market in India has been exploding at the same time. The country of 277 million internet users, which in the first quarter of 2014 was barely a blip in the global market for cab aggregators (in terms of rides), grew into the third biggest market after China and North America in the first quarter of 2016, according to the Internet Trends 2016 report by Mary Meeker, partner at Silicon Valley venture capital firm Kleiner Perkins Caufield and Byers.

Besides, after Uber sold its China business to Didi Chuxing in August, India has become for Uber what it is for another American tech giant, Amazon—a market it cannot afford to lose.

Industry experts say Ola pulled away from its rival after launching Micro, a low-cost offering, in March last year. However, the success of Micro also proves that a change in prices dramatically affects business. “It is pretty much a price game now. There are elite segments which have a view on services, but apart from them, consumers largely look for a cheaper option and that is the only criteria for them. Uber has been aggressive with prices last year. That’s why Ola launched Micro to match the prices and gained some market share. But Uber has stronger financial muscle. If Ola raises another round, they will give a good fight as well,” said RedSeer’s Kumar.

Uber’s most affordable offering, UberGO, is priced at Rs7 per km in Bengaluru, Rs6 per km in Delhi and Rs8 per km in Mumbai, while Ola’s cheapest service, Micro, costs Rs6 per km in all three cities.

According to the RedSeer customer preference index, a survey of 3,107 consumers in more than 12 cities shows Uber has been gaining popularity. While customer preference for Ola surged in the quarter ended March 2016 following the launch of Micro, Uber turned around in the second half.

The customer ride preference index score for Ola dropped from more than 70% in the March quarter last year to less than 60% in the December quarter, the report said.

To be sure, both Ola and Uber have rolled out new services to attract more consumers. While Uber rolled out hourly rentals earlier this month, Ola has been at it since June. In May, it had also launched inter-city cab booking. Apart from this, in an attempt to nurture a loyal customer base, Ola launched a monthly subscription service called Select, where subscribers get a preference in cab allocation and are not subjected to surge pricing, among other benefits.

The company also launched a so-called connected-car experience, called Ola Play, in November last year, where consumers can listen to music or watch videos in tablets installed in the cars.

Source: Livemint


A study has been done by Ernst and Young India with the intention of providing an overview of the investment climate, taxation, forms of business organisations, and business and accounting practices in India.

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