The taxi-hailing application Uber that holds India as its biggest market outside the United States stated that it will focus on captivating the Indian market. The company intends to do the same by leveraging the technology in order to cut the costs and not to compromise on subsidies and discounts.
The Asia Head Uber, Eric Alexandser stated that it is not a game of renting the market share. You can do subsidies as you grow and intend to build awareness for the drivers and riders. The funding will eventually dry out and the discounting cannot happen forever. This is where they opt for tech as Uber can do more trips on an hourly basis and keep the drivers’ utilization numbers high. Later, they can afford to cut the prices, he stated.
As of now, Uber gives away Rs 125 as an incentive to the drivers per trip across the Indian cities and the cost per ride to the customers is reduced as well. Ola, its rival in the market is also providing aggressive discounts to expand its reach.
Bhavish Aggarwal, the Chief Executive of Ola stated that in August during a conference that the company provides incentives to the drives and those customers who are in the early stages of entering a specific city. He stated that they will add a lot of value for the services for their drivers such as house loan, car loan, etc. They are committed to build community services, he added.
In Bengaluru, Uber’s base fare is Rs 35 and it charges Rs 7 per kilometer and Rs 1 per minute. These are the charges for UberGo, its lowest category. On the other hand, the budget brand of Ola, TaxiForSure charges Rs 49 for the first 2 kilometers and Rs 6 per kilometer and Rs 1.5 per minute of waiting.
It can be said that such companies are racing in order to make their rides cheap as the auto rickshaws rides so that it will benefit both the customers and drivers. The discounting has helped them acquire more customers and expand their reach quickly.