Meru has slashed fares on all rides by a flat 40% in a desperate attempt to attract users, while fares on Uber and Ola are at their minimum threshold as a market devoid of demand ensures surge pricing never kicks in.
The situation has come as a double whammy for drivers attached to such platforms.
Not only are they completing fewer rides each day, but they are also earning less on each trip they complete. Last week, ET had reported that driver unions in Bengaluru had even approached the state government seeking waiver of EMI payments for two months in lieu of falling earnings of drivers.“It’s a dire situation that drivers are in and we understand that, and hope things normalise soon,” a senior Ola executive said. When asked whether the company was doing anything to aid driver earnings, he said “no such measures have been taken yet.”
In a global policy tweak, Uber said it would compensate drivers for up to 14 days of sick leave in case they are placed under quarantine. An Uber spokesperson declined to comment on specifics of what it was doing to improve demand and driver earnings.
Both Ola and Uber declined to comment on the business impact and measures taken to regain customer confidence.
Meru’s business has dropped 25-30% in the past few days, said Neeraj Gupta, founder and CEO of Meru Mobility, in which Mahindra & Mahindra holds a majority stake.
“We have reduced our fares by a flat 40% on the Meru app, with fares starting as low as Rs 39, thus making the fleet more accessible to customers,” Gupta added.
Meru said its employee transportation and car rental businesses have, however, seen a marginal dip in usage, but this makes up for only a fifth of the overall ridership.
Usage of cab hailing services, which largely serve customers in metro cities for commute and airport rides, have been largely limited to white-collar workers due to their premium pricing. With several organisations asking employees to work from home and air travel taking a hit, the user base has dried up.
“With work from home being the operating norm and staying at home being safest, public transport and ride hailing has seen a substantial drop,” said Avik Chattopadhyay, an independent auto expert. “During an adversity like this, people are actually discussing the positives of having a personal mode of transport as it is the safest.”
Experts also said firms such as Shuttl, which operates AC buses for office commute, and MoveInSync, which offers a cab service to employees, would be severely impacted since their businesses are dependent on work commutes.
Other shared mobility platforms hit
Other on-demand mobility players say they have not seen any sharp a fall in ridership just yet, although they remain cautious since any further shutdowns could hit their businesses hard.
Bike taxi provider Rapido said its ridership has not dropped as it does not serve too many white-collared workers. “We are used a lot by blue-collared workers and they don’t have the luxury to work from home. Also, our business is a lot less concentrated in the metros, and in Tier 2 and 3 cities the impact of the virus hasn’t hit yet,” said Aravind Sanka, co-founder and CEO of Rapido.
Bounce and Vogo, two players in the scooter rental space that started their operations in Bengaluru, say they have seen only a 10-15% drop in ridership over the past few days.
While office commute was a big use case for both services, Vivekananda Hallekere, co-founder and CEO of Bounce, said the drop has been largely due to people choosing self-ride services over cabs fearing they will catch the virus from fellow travellers.
Yulu, which operates in the two-wheeler EV rental space, also said that the impact on its business has been contained at under 10%.
No respite in the near term
Even as fares turn low, it is unlikely that customers will return to hailing cabs till the outbreak is contained. Globally, too, ride hailing is flatlining as more people exercise social distancing and work from home becomes the norm.
Uber Technologies’ stock price has more than halved in the last one month, from $40.18 per share on Feb 18 to a little under $19 on March 17.
“The primary demand has vanished, and it somehow needs to come back. A drop in fares may not necessarily generate demand at this point as it is not an issue of competitive or pricing pressure,” said V G Ramakrishnan, managing partner at Avanteum Partners.
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