INTRODUCTION

India- A country known for lowest car ownership across all emerging countries found a new answer to its mobility needs in 2013, when Taxi for sure launched its app based on-demand taxi programme. The very same year, when Uber entered India and launched its services in Bangalore.

 

Till 2014, there were very few takers for on-demand taxis but a lot changed in 2015 when Ola rolled out a much improved and accurate app with broader coverage. Till 2014 and even early 2015, Ola`s ~20% bookings were made through laptops and desktops. India`s weak internet infrastructure and comparatively lower smartphone penetration was prime reason behind this.

 

The smartphone penetration was 6% in India in 2013 and, reached 28% by May 2019. In metro cities, the penetration reached 60%-65% by Q1-2015 and that is  when and where the revolution of on-demand taxis began in India.

 

MARKET SEGMENTATION

Market Segmentation-On Demand Taxi Market in India by ride category, city type and payment mode

 

 

 

MARKET DYNAMICS

Declining data costs in India has helped many low income users to come online and mid-income users to stay online for prolonged duration.This has truly helped growth of  on-demand taxi market in India.

 

Rising fuel prices have put a massive burden on profitability of all commercial fleet operators in India. Diesel prices are just 7 Rs less than all time high of 75 Rs($1.1)/ liter. Ola and Uber`s incentive spending has gone down and simultaneously their commission rates have gone up, hurting earnings of their “driver partners”.

 

On-demand food delivery and mobility on demand are two prime requirements of urban dwellers, who find car ownership and maintenance a “liability”. As the explosive growth of this market has cooled down now, both Ola and Uber ventured into food delivery services to create new streams of revenue and further expand their reach.

 

Both Ola and Uber have been accused of overcharging users during peak hours, by “surge pricing”. Surge pricing drew a lot of criticism and attention from transport regulatory authorities in 2015 and 2016, when a ride used to cost 2.5X-3X of regular prices. However, now in 2019 it seems to have been smoothed out and surge prices now typically range between 50%-60%.

INVESTMENT IN ON-DEMAND TAXI OPERATORS

On demand taxi in India- Funding between 2015-2019

 

The year 2015 saw money coming in from both Ola and Uber investors for expansion in tier-2/tier-3 cities and getting more drivers on-board. Ola didn’t raise any fresh investment in 2016.Meru cabs, one of the oldest cab operators of India raised $75M cumulatively in 2015 and 2016 and hasn’t raised any more rounds beyond that.

 

Between 2018 and 2019(May), only Ola has raised funds to the tune of $785 Million.

 

MARKET SIZE AND FORECAST

The Indian taxi market size was estimated at 1.9 million taxis estimated to generate ~$10-$11 Billion revenue in 2019.The unorganized small fleet operators account for ~91% market share in terms of registered taxi fleet. The arrival of on-demand taxi players has helped organize this market to a great extent.

 

The target user-base of on-demand taxis in India is typically urban with an income of >25,000 INR ($350)/ month. Although, with growth in share/pool rides, that income threshold has further reduced. In India, both Ola and Uber, earn ~78% of their revenue from budget segment rides.

 

Apart from Meru cabs, the cab aggregators have an asset-light business model and don’t own any vehicles of their own. They simply charge a 20-25% commission on every ride just for the match they provide between a rider and a driver.

 

In 2016, Ola and Uber accounted for ~400 Million and ~260 Million rides each. By 2017, the cumulative figure went up by 12%. In May`19, Ola and Uber had 6.9 Million and 6.3 Million Monthly active users respectively.

 

The market size of on- demand taxi market in India was estimated at $XX Million in 2019 , growing at YY% CAGR till 2025

 

The car manufacturers in India are capitalizing on the growing popularity of on-demand taxis. The passenger car market leader with 51% market share in India, Maruti launched the second generation Swift Dzire Tour in Oct `17. About 70%+ Toyota Etios is sold to commercial segment.

 

Hyundai now sells cars to taxi segment under Prime brand and post recent (March 2019) investment in Ola is planning to manufacture EVs for ride hailing firms by 2021.

 

COMPETITIVE LANDSCAPE

Ola vs Uber is the best way to define the competitive landscape of on-demand taxi market in India. Both unicorns, funded by Softbank have put up a relentless fight. The other players namely Meru cabs and Jugnoo are pretty much non-existent in the overall scheme of things.

 

Ola has 1 million+ drivers on its platform, whereas Uber has just about 0.6 million “driver partners”. Ola is on track to become a holding company for various different companies under one group. This move is widely looked at a move to boost valuation, but we believe it is more on the lines of making the company diversified and sustainable in the long run.

 

As of May`19, Ola was valued at ~$6 Billion has raised over $3.8 Billion till date and about $510 Million raised in 2019 alone.

 

Ola expanded Internationally in England, Australia and New Zealand in 2018. Uber on the other hand has sold its Chinese and South East  Asian business to Didi and Grab respectively but  is fully committed to the Indian market.

 

COMPANIES PROFILED
  1. ANI Technologies(Ola)
  2. Uber india Systems
  3. Jugnoo Rides
  4. Meru Cabs

 

THIS REPORT WILL ANSWER FOLLOWING QUESTIONS
  1. Growth of ride hailing and ride sharing in India in terms of volume(Million rides) and value($Million)
  2. Car ownership trend among under 30 age group buyers in top 5 cities in India, its effect on new car sales
  3. Opportunity for on-demand taxi operators in tier-3 cities in India
  4. Threat to ride hailing in India from high two wheeler ownership and bike and scooter sharing
  5. Resistance from three wheeler and regional taxi unions 
  6. Share of cash and digital wallet in payment? Which digital wallet is most popular and why?
  7. Major pain points of driver partners 
  8. How are car manufacturers , self-drive rental operators and small fleet operators reacting to the growth n ride hailing?
  9. Which category of rides are most popular in top 5 cities in India and why?
  10. Opinion of city planners and transport authorities on ride hailing improving/worsening traffic congestion
  11. How is food delivery supplementing operators revenue?
  12. Competitive landscape and opportunities for new operators
  13. How do Ola and Uber plan to improve profitability and reduce cash burn
  14. Opportunity in relatively niche -luxury and outstation travel segment
  15. How do taxi operators plan to deal with safety issues in different parts of India?

 

 

To customize the report, write to us at sales@mobilityforesights.com

 

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1Market Segmentation3
2Executive Summary5-6
3Introduction7-10
4Insights from Industry stakeholders11-12
5Comparison of monthly active users of all operators13-14
6About the unorganised taxi market in India15-18
7About vehicles used in Indian taxi market19-22
8Taxi Drivers- Demography, Profile ,Income23-25
9Impact of car pooling, car leasing and subscription on on- demand taxi market in India26-27
10Legislative roadblocks in major cities28-29
11Market Size ,Dynamics and Forecast By city type30-42
12Market Size ,Dynamics and Forecast By Ride category44-54
13Market Size ,Dynamics and Forecast By Payment mode56-64
14Competitive Landscape65-67
15Market Share of major players68
16Company Profiles69-73
17About investors in on-demand taxi operators74-76
18Unmet needs and Market Opportunity for new vendors78
19
Expansion to food delivery- Impact on revenue and profitability
79-80
20
Opportunity in the on-demand three-wheeler/auto market
81-82
21Conclusion83-84
22Appendix83-85
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