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Shared rides the next battleground for Ola, Uber

LiveMint logoLiveMint 05-06-2017 Sayan Chakraborty

Bengaluru: Uber Technologies Inc. and Ola (ANI technologies Pvt. Ltd) are spending heavily to expand ride sharing, a category considered the next big growth driver for both cab hailing firms.

Shared rides account for 25-30% of overall trips on Ola and Uber in key cities such as Mumbai, Delhi and Bengaluru, three people aware of the matter said. Both firms have either dropped fares or are running promotions for ride sharing to attract new customers. For instance, Uber has capped carpooling fares at Rs49 for the first 8km in Delhi, Bengaluru and Chennai.

Ola is offering Share Pass, a subscription-based service launched in November last year that offers carpooling at a flat fare, at a steep discount. Ola is also offering a share pass for five trips at Re1. Usually, the firm offers a five-ride pass for Rs149, while the ones for 20 and 40 rides costs Rs249 and Rs349 per month, respectively, for the first 8km.

Ola said in a note on Monday that more than 20 million carpool rides had been pre-sold through the Share Pass subscription. “We have seen a high uptake for the category on both the customer as well as the driver partner side. Cities such as Delhi, Bengaluru, Mumbai, Hyderabad and Kolkata are the biggest users of Ola Share, and to keep the momentum going, we are selling Share Pass at a flat Re1 in all our Ola Share cities,” Vishal Kaul, chief operating officer at Ola, said in a note.

The firm claims carpooling, launched in October 2015, has grown 500% in terms of number of rides in one year. The company offers carpool in 26 cities as against Uber’s seven.

Uber claims ride sharing has witnessed maximum uptake in Delhi, Bengaluru, Mumbai and Hyderabad. “The growing adoption of uberPOOL is very encouraging. The fact that millions are willing to share rides gives us the confidence that we are collectively driving a positive change to reduce carbon footprint,” Shweta Rajpal Kohli, head of policy at Uber India, said in a statement.

Uber India president Amit Jain had told Mint in an interview in March that Uber is lobbying the government to ease regulations to allow it to introduce ride sharing, using private cars in India, a move that could become a game changer for Uber and Ola, especially as the services by both firms have been disrupted recently in the wake of drivers’ protests following a drop in incentives.

In the US, Uber’s home market, much of its business comes from the so-called peer-to-peer (P2P) model, where any person who owns a car becomes a driver on Uber’s platform.

According to industry experts, ride sharing, with low fares, has emerged as an important customer acquisition mode for both firms.

“With carpooling, Ola and Uber are getting customers who would not otherwise use their services on a daily basis because of the prices. So, the companies are getting access to a set of customers who are cost-conscious, do not use a cab on a daily basis and instead use a bus or an auto rickshaw. Most of these consumers are young professionals. Over time, they will graduate from using a shared car to booking an entire cab, which makes it a brilliant strategy to on-board new customers,” said Sreedhar Prasad, partner, e-commerce and start-ups, KPMG in India.

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