Ola, Uber losing $50 mn each every month: Meru CEO
Every month, cab hailing firms Uber and Ola are losing $50 million each, claimed Siddhartha Pahwa, CEO of Meru Cabs, the country’s largest radio taxi service.business Updated: Dec 21, 2016 10:37 IST
Every month, cab hailing firms Uber and Ola are losing $50 million each, claimed Siddhartha Pahwa, CEO of Meru Cabs, the country’s largest radio taxi service.
“The only difference between us and them is that they are dumping capital on drivers and customers, and we aren’t,” Pahwa told HT.
The radio taxi business is down in the dumps. Heavy discounts and low fares moved passengers away from radio taxis to cab aggregators. Meru, too, has felt the heat. Before Uber’s entry, three years ago, it was growing at 45%. Now it is down to 10%. Its market share, once 75%, is also 10%, and more drivers are leaving to join Ola and Uber.
Three years ago, when Meru started losing its business to Uber and Ola, Pahwa lost his sleep. “I am much calmer and patient now, and I sleep well,” he said.
Capital dumping comes with its own problems. Travis Kalanick, founder and CEO of Uber, during his India visit said his company would “innovate to work towards a profitable future”. That would require reducing incentives and discounts.
“The day the incentives stop, drivers will move away from Uber and Ola …” Pahwa said.
The incentives have attracted lakhs of drivers. In the absence of discounts, fewer passengers may opt for an Ola or an Uber cab. Uber, lately, has faced a lot of backlash in Europe and the UK, over similar issues. In some instances, Uber drivers made less than the prescribed daily wage.
There are three reasons why Pahwa thinks capital dumping will stop. “Investors will seek profitability, the two largest players will try to form a cartel and increase price, and that might force the competition commission to step in,” he said.
He expects one of these to happen in the next 18 months. That’s also a chance for Meru to make a comeback. In an industry that is expected to become worth $40 billion by 2025, Pahwa will be happy to get even 5% of the business.
Meanwhile, he is expanding his business into shuttle services, both for intra- and inter-city travel. He is waiting for this phase to get over. “They are burning money (spending a lot) as there is not enough business out there . ... It is not sustainable,” Pahwa said.