Home >Auto News >Future investment in shared mobility space likely to be compromised, says report
Currently, two-wheeler rental and taxi market is facing strong short-term headwinds, particularly on achieving positive unit economics.
Currently, two-wheeler rental and taxi market is facing strong short-term headwinds, particularly on achieving positive unit economics.

Future investment in shared mobility space likely to be compromised, says report

  • A report by consulting firm Praxis Global Alliance says covid-19 has greatly impacted the shared mobility market with companies like Bounce, Yulu recording 40-50% drop in rides before suspending operations.

The outbreak of the coronavirus pandemic and the fear of its spread have greatly impacted the shared mobility market, especially since travel to workplace has reduced significantly a report said.

“Covid-19 has greatly impacted the shared mobility market with companies like Bounce, Yulu recording 40-50% drop in rides before suspending operations; future investments and consumer favorability likely to be severely compromised," said a report prepared by consulting firm Praxis Global Alliance.

In India, shared mobility has attracted $4.4 billion in private equity funding between 2015 and 2019. Cab aggregators received as much as 80% of the funding, followed by two-wheeler taxi and rental startups that received 13% of total investment, the report said.

Metro cities in India such as Bengaluru, New Delhi, Mumbai and Pune are among the most congested in the world, which calls for a need to a shift towards shared mobility in urban conglomerates. According to a NITI Aayog report, shared mobility has a number of potential benefits, most of which arise from an increase in system efficiency through higher asset utilization and improved connectivity. The government is also working on national-level guidelines on shared mobility, focusing on pooling services by private car owners, to tackle pollution and de-congest metros.

Currently, two-wheeler rental and taxi market is facing strong short-term headwinds, particularly on achieving positive unit economics. However, long-term growth prospects remain intact, the report said, adding that barring two wheeler taxi, the regulatory framework for other modes of shared mobility is well-defined.

“Regulatory challenges, including lack of clear regulations at state level on bike taxi operations, and cumbersome process of getting commercial license for private two-wheelers has created a regulatory grey zone for bike taxi operators. For example, in Haryana, only 2,000 yellow number plates have been issued for bike taxis till May 2019, often taking up to six months," it said.

Travel to workplace has reduced significantly, by around 47%, due to the outbreak of covid-19 and a subsequent lockdown for over two months. Two-wheeler rental startups such as Bounce and Yulu have witnessed 40-50% dip in daily rides across all cities, as of end of March, it said. Most cab aggregators also suspended ridesharing services temporarily.

As far as near-term implications of covid-19 for key stakeholders are concerned, the report said that consumer demand crash will lower revenue. “Effusion of new capital for companies will be difficult as investors become more conservative with capital. Consumer favourability will be compromised to save burn in a hostile environment," it said.

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