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Business News/ Companies / News/  Long, bumpy ride ahead for mobility firms in 2021

Long, bumpy ride ahead for mobility firms in 2021

For ride-hailing apps like Ola and Uber, the core mobility business is likely to take longer to witness a full recovery compared to two-wheeler startups

(Photo: AFP)Premium
(Photo: AFP)

Bengaluru: Shared mobility startups are relying on new use cases, such as visits to pharmacies and supermarkets, to stage a rebound as uncertainty over the renewed threat of a new coronavirus strain could delay the reopening of workspaces and return of urban commuting in 2021. Operators said they may see recovery from the first quarter of next year, but expect the road to revival to be long, bumpy and fraught with challenges.

For r-hailing apps like Ola and Uber, the core mobility business is likely to take longer to witness a full recovery compared to two-wheeler startups. Both firms are also staring at a potentially long-winding battle with regulators over new rules that aim to cap surge pricing and driver commissions, among other clauses that threaten to alter their business models. There is a strong chance that Ola and Uber will challenge the rules if consultative changes are not initiated, said industry experts.

A top executive at a ride-hailing firm said the new rules, which have far-reaching consequences, were decided upon without any consultations. “It is over-regulation and excessive requirements for a nascent industry that will be a setback for recovery, and one of the most regressive guidelines," the executive said, seeking anonymity.

The new guidelines will possibly be part of a courtroom battle much like the first set of regulations, On-demand Transportation Technology Aggregator Rules, which was challenged by both Ola and Uber in the Karnataka High court after it was introduced by the state government. This could be repeated as states are currently studying the regulations and are expected to issue their own set of rules in early 2021 based on the Centre’s guidelines.

This could dampen recovery for the ride-hailing companies who have also relied on segments such as autos, rentals and other non-core offerings to bring in revenues.

For two-wheeler mobility startups, the situation looks brighter but they are also dependent on business from other use cases such as longer retention of vehicles for running errands, leisure activities around user homes and higher demand from blue-collar workers, to fuel recovery, said the operators.

“We operate in close to 100 cities pan India including Tier I, II and III cities. Our strongest markets include Hyderabad, Bangalore, Delhi-NCR, Kolkata, Chennai and Patna. We are looking to expand our footprint further in the next months," said Aravind Sanka, co-founder, Rapido, adding that the pandemic became “an opportunity in adversity" for the company.

A 22 December Google report shows that mobility trends for places such as supermarkets, pharmacies, food markets and speciality stores saw 9% increase while travel to other residences was up 10%. In sharp contrast, trends recording travel to work, which contribute to a majority of businesses for mobility companies, fell 21% while visits to restaurants, cafés, shopping centres and cinemas dropped 27%.

“2021 could well prove to be the turnaround year for mobility in India driven by a strong rebound as air travel resumes, shift from crowded public transport to ride hailing/ sharing, sector formalization and increased safety through regulatory framework and stronger unit economics driven by cost efficiencies effected during pandemic, “ said Ujjwal Chaudhry, associate partner at Redseer, a consulting firm.

New product offering opportunities like Uber Connect, auto rentals (by Uber), catering to essential services and the installation of plastic sheets around the cab and auto drivers as shield are likely to continue at least in the near-term with the threat of the pandemic still just as potent as it was at the start of the year.

The faster recovery of two-wheeler mobility startups has given the segment a better opportunity to execute its plans like having more electric vehicles (EV).

Both Bounce and Vogo are looking to have 4,000 EVs in their fleet while Uber aims to have 3,000 EVs across two-, three- and four-wheelers on its platform by the end of 2021. Ola is betting big on its soon-to-be launched two-wheeler EV.

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Updated: 27 Dec 2020, 10:08 PM IST
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