There will be no let-up in India investments: Uber
Uber will continue to chase growth over profits in India, its most important international market where it is competing with home-grown rival Ola
San Francisco: Uber Technologies Inc. will continue to invest heavily in India, the ride-hailing company’s most important market outside the US, for an indefinite period rather than focus on cutting the company’s massive losses in the world’s fastest-growing major economy.
“The market opportunity is so significant that we’re not focused right now on how can we get this business to profitability,” chief operating officer Barney Harford said in an interview at the company’s headquarters in San Francisco. “We have an indefinite investment horizon in India.”
Uber is clocking more than 10 million rides a week in India, nearly twice as many as it was 18 months ago, as the company readies to boost the pace of investments. Since entering India in August 2013, the US-based company has expanded to become one of the top two ride-hailing service providers, along with local rival Ola.
India has become Uber’s most important international market after it sold its businesses in China and South-east Asia to local start-ups Didi Chuxing and Grab, respectively.
“We have a clear position of strength in India. After the Grab deal, we are increasing levels of resources that we can invest in opportunity markets and India is right on top of that list,” Harford said.
While India is considered to be a lucrative long-term market, the current market size is small. India’s cab-hailing market in terms of gross booking value was about $2.1 billion in 2017, according to RedSeer Consulting. That is far smaller than Uber’s business in just the city of San Francisco. And given the relatively small size of the Indian market, it requires companies to book huge losses. For instance, Ola reported an operating loss of Rs 3,731 crore on revenue of Rs 1,178 crore for the year ended March 2017, according to official documents. (Uber’s numbers are not publicly available.)
Harford said that even a public listing of Uber— expected within the next two years—will not stop the firm from continuing its aggressive investment pace in India and chasing growth over profits.
“If you overlay the GDP growth potential in India (with the transportation market potential) it absolutely makes sense for this to be one of the markets we’re investing in over the long term. The logic imperative to invest in India over the long term is very clear. We’re confident that we’ll be able to articulate that and the investors who choose to invest in Uber will be investing with that understanding,” he said.