Lower driver incentives lead to Ola, Uber car crunch: report

Bengaluru: Is your Ola or Uber app taking long to search for cabs these days? This is probably because application based cab-hailing services like Ola (ANI Pvt. Ltd) and Uber Technologies Inc seem to be experiencing up to 25 per cent drop in the number of cars affiliated to their platforms, according to a report by RedSeer Management Consulting Pvt. Ltd.

According to Livemint, the report suggests that the supply of cabs had reached a high in December last year to approximately 500,000 vehicles. The supply has been plummeting ever since to about 380,000 vehicles in the March quarter, this year. The report believes this is due to a fall in incentives for drivers, which led to large-scale protests in parts of the country and also prompted them to quit.

“This trend was precipitated largely by continuously dropping incentives and driver incomes. Drivers who left the online platforms either shifted into other (offline) driving jobs or changed professions entirely,” says the report.

However, according to Livemint, the numbers of cars that Ola and Uber claim are affiliated with them are higher than RedSeer’s. Both companies claim to have a supply of about 5-6 million cabs each, although it remains unclear as to how many of these cabs ply daily.

Ola and Uber drivers from Bengaluru and Delhi had taken to the streets in February and March this year to protest against the decline of incentives and the every-changing incentive structure of the firms. They were also unhappy with the inhuman working hours, which were adversely affecting their lifestyles.

Ola and Uber had responded by rewarding the drivers with bonuses, apart from the regular fares to ensure their loyalty and an adequate supply of cars. However, both companies have been reducing such expenditure now to maintain their profit margins.

Although the strikes were called off, they brought out the issues in the existing framework of the companies. Incentives are the reason drivers enlist themselves on these platforms. This means the businesses cannot afford to be on the wrong side of these drivers.

“The future of our business depends on making driving with Uber the most attractive choice. Given the strong demand from riders, drivers across cities continue to join the platform to get entrepreneurial work at the tap of the app and we are committed to supporting them. We currently have 240,000 active driver partners (who would have taken at least one ride in a week) and are seeing new sign-ups every day. We are not seeing any significant churn,” an Uber spokesperson said in an email response, contrary to what the RedSeer report claims.

To ensure a steady supply of cars which they can control themselves, both companies have set up car-leasing businesses—Ola Fleet Technologies Pvt. Ltd and Xchange Leasing India Pvt. Ltd. Uber has also been urging the government to allow the firm to introduce ride sharing using private cars in India. This will enable any person with a private car to sign up with Uber and work as a driver on a part-time or a full-time basis.