MUMBAI: A sudden shut down in March and a staggered unlocking of businesses and travel since then has dealt a body blow to the $10 billion (Rs 73,600 crore) cab market in India, including app-based shared mobility providers such as Uber and Ola.The last-mile transport industry is set to lose about a third, or almost Rs 25,000 crore, of its annual turnover in the ongoing fiscal 2021, according to people tracking the industry. Thousands of
MUMBAI: A sudden shut down in March and a staggered unlocking of businesses and travel since then has dealt a body blow to the $10 billion (Rs 73,600 crore) cab market in India, including app-based shared mobility providers such as Uber and Ola.The last-mile transport industry is set to lose about a third, or almost Rs 25,000 crore, of its annual turnover in the ongoing fiscal 2021, according to people tracking the industry. Thousands of operators are expected to go out of business and hundreds of thousands of drivers and other workers are likely to lose their livelihood. Merely 20% of the market is organised. The rest including auto rickshaw operators are largely scattered and unorganised.The trips that a cab does a day are still only around 30-50% of the pre-Covid average in several markets. This is also after losing the business for almost a quarter. Unlike other businesses, revenue lost cannot be recovered and it is going to lead to tens of thousands of cabs being repossessed by financiers in the coming months, according to people tracking the sector.There are close to 2 million cabs and an equal number of auto-rickshaws plying in India. As many as 2,00,000-3,00,000 drivers may already be out of job or on the verge of that.According to people in the know, about 800,000 drivers were registered under the app-based shared mobility providers. In the last six months, that number has come down by 200,000-300,000, with business at just 20-30% of the normal levels, they said.A loan book of Rs 10,000 crore is under threat due to closure of operations by these driver-partners, the people said.With social-distancing becoming the order of the day and personal mobility gaining speed, it is a long hard road to recovery for last-mile public transport providers.The travel and hospitality business has been among the hardest hit by the pandemic. At best, the last-mile market is likely to come back to 50-70% if the market recovers quickly, said people tracking the sector.“Consolidation is already underway. The large operators and small operators may survive these unprecedented times, but it is the midsize operators who have a sizeable fleet and a decent workforce on payroll that are the worst hit,” said an executive from the industry.A cab driver needs Rs 50,000-70,000 a month to meet his fixed expenses. With his earnings now dropping to Rs 20,000-25,000 or less, he is struggling to meet his obligations of EMI, driver salary, maintenance, etc.Already the likes of Ola and Uber have written off Rs $4.5 billion since their entry into India and a similar amount may have to be infused again.Ola and Uber did not respond to emails seeking comment.A spokesperson for cab aggregator Meru said the business was back to merely 30-40% of pre-Covid levels, and the company was hoping to touch 70% in the next couple of quarters. That expectation is based on hope that a vaccine would be discovered and unlocking would bring back the users in the market.“While the demand is improving week after week, yet it is nowhere close to normal. Obviously because of lack of demand, the number of drivers on our platform has dropped significantly,” the spokesperson said.Experts believe the business would come back as India gets back to work, but in different shapes and forms, and that business models might change as well.Post-Covid, while consolidation may lead to the sector becoming more organised, within the organised last-mile space, the issues of ride cancellation, peak charges and poor ride experiences would not be appreciated. The situation may give rise to specialists in last mile, office commute, airport transfers and outstation among others.According to a recent Facebook-Boston Consulting Group report, 51% of people in a survey before the outbreak of Covid-19 in India had preferred public or shared transport to commute. That number has now come down to 30%. The share of potential car buyers who had preferred public or shared mobility has shrunk to 52% now from 67% pre-Covid, as per the report, tilted ‘Turn the Tide’.The number of rides on the shared mobility platform had grown from 1 million per day in 2015 to 3.9 million at the end of 2019, according to the Facebook-BCG study.But the pandemic has disrupted all that. “There is a clear shift from shared mobility to personal mobility and even in personal mobility, a significant set of buyers are looking for downtrading with utility taking precedence over trend or features,” Boston Consulting Group managing director Nimisha Jain had told ET.
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