Ride hailing firm Uber is planning to offer self-driving car rentals and shuttle bus services in India to trump key rival Ola, three people aware of its plans said.
The move is part of the San Francisco-based company’s plans to expand its core mobility business in India with new products and partnerships, after exiting the food delivery business. The company has already formed a team for the foray into self-drive rentals and shuttle buses, the people cited above said on condition of anonymity.
Uber India has formed several partnerships and taken strategic initiatives with mobility firms including Drivezy, Zoomcar, Bounce and Revv to bring new vehicles on its platform, according to one of the three people.
“In Bengaluru and many other cities, Uber has started partnering with middlemen such as tours and travel operators and mobility platforms like Drivezy, Zoomcar and Revv, who can arrange taxis on a rental basis for Uber,” said the person. Under this model, the Uber driver approaches Drivezy or Zoomcar, from which a vehicle is leased for 5-30 days.
The Uber team will work to bring self-driving four-wheelers from these platforms directly on to the Uber app for rentals, this person added. Ola has a four-wheeler rental product since October 2019.
Globally, Uber has avoided owning vehicles and the new sourcing model will help it avoid asset management costs. The company shut its cab-leasing subsidiary, Xchange Leasing, in 2017 due to high costs. The leasing unit partnered with manufacturers and financial institutions to co-lease vehicles to Uber drivers. Rival Ola continues to operate a leasing business, which suffered a loss of ₹162.3 crore in FY19, up 91% from the previous year.
An Uber India spokesperson said the company is constantly evaluating new business models. “We have recently experimented with car rental companies so that drivers and fleet partners could access these vehicles,” the spokesperson said in response to Mint’s queries.
Uber ventured into the shuttle service business in Cairo in December 2018, allowing users to reserve bus seats. Since then, it has begun offering these services in several cities in West Asia and Latin America. However, entering the four-wheeler self-driving rental market will be its first anywhere.
In January, Uber India sold its food delivery business to Zomato for a reported $350 million. The transaction involved the ride-hailing firm taking a 10% stake in Zomato’s India business. Zomato and Swiggy are locked in an expensive battle where both firms continue to burn money in discounts, and Uber decided to opt out. Its US parent, Uber Technologies, is still recovering from a disappointing initial public offering in 2019, which has piled pressure on chief executive Dara Khosrowshahi to cut costs.
In May, Uber announced a pilot with an electric scooter sharing platform Yulu in Bengaluru. Mint had earlier reported on Uber’s plans to integrate bike rental startup Bounce’s vehicles on to its platform. In the US, Uber lists Jump and Lime electric bikes in cities such as Atlanta, San Diego and California. In April 2018, Uber acquired Jump for a reported $100 million, after piloting the service in San Francisco in January that year.
“The barrier to entry in two-wheeler rentals is high in India,” said the founder of a company in the two-wheeler rental space, asking not to be named. “There is a state-level licence for which you have to spend ₹3-4 lakh in fees for each state you want to enter and also spend money complying with the central government’s additional regulations under the Motor Vehicles Act. The acquisition-led strategy decreases financial liability for Uber, when compared to investing in assets directly.”
Uber posted a $1.1 billion loss in the fourth quarter of 2019, a 24% increase from the year earlier, largely led by losses incurred in the UberEats food delivery segment. Uber’s total revenue almost tripled to $4.1 billion during the same period.
This article was first published on livemint.com.