Two-wheeler rental startups to cut fleet size as demand drops2 min read . Updated: 14 Jul 2020, 10:47 PM IST
Firms downsizing their fleet as many of them are forced to cut down on both capital, operational costs
BENGALURU: Urban mobility startups are downsizing their fleet by selling off vehicles to the second-hand market as many of them are forced to cut down on both capital and operational costs, said three people aware of the development.
Bengaluru-based Bounce, which raked in most of the funding in the micro-mobility space in 2019-20, is selling 8,000-10,000 of its scooters to the second-hand market, said one person aware of the company’s operations.
Bounce invested millions in adding gearless scooters in cities such as Bengaluru, Hyderabad, and Mysuru. At present, it has more than 20,000 scooters on its platform. The startup’s dockless scooter-sharing model, which is most prevalent in Bengaluru and Hyderabad, used to clock 100,000-120,000 rides a day before covid-19 affected demand.
“Demand for scooter sharing and rental products has been affected and at least half the demand has been wiped out from the market after the lockdown. Bounce even laid off most of the employees in the demand and planning team because of loss in demand as a result of the lockdown," said the person mentioned above aware of Bounce’s operations.
The startup had raised around $105 million at a valuation of $450 million in its Series D funding in January led by Accel Partners and Facebook co-founder Eduardo Saverin’s B Capital, making it the most valued player in the space. Its existing investors include Falcon Edge, Chiratae Ventures, Omidyar Network India, Maverick Ventures, Sequoia Capital India, and Qualcomm Ventures.
The startup has also resorted to directly selling used scooters to its users. The Bounce website lists its two-wheelers on sale starting from ₹20,000 for a Scooty Pep and up to ₹30,000 for Honda Activa models.
The entire proceeds from the scooter sales will be used to invest in electric vehicles (EV) and for ramping up investments in infrastructure and technology required for converting its fleet to EVs. The startup had recently announced a tie-up with EV manufacturer Ather Energy to lease out Ather bikes on the Bounce rental platform.
Bounce’s rival VOGO also has plans to entirely convert its shared fleet to EVs but did not provide a timeline.
There has been a “definite paradigm shift in the mobility pattern because of the pandemic" and the pace of growth in the mobility industry has slowed down, said Anand Ayyadurai, chief executive officer, VOGO. Ayyadurai confirmed that VOGO has also begun hiving off its petrol-based scooters to the second-hand market, but declined to comment on the specifics.
“We were able to retrieve around 40% of our pre-covid (demand) volumes post lockdown…We are strengthening our commitment to electric mobility and have outlined a fresh plan to increase EVs on our fleet and we are planning to phase out petrol scooters," Ayyadurai said.
Mobility startups such as Bounce, VOGO, and Zoomcar take loans from NBFCs and private banks to finance the procurement of vehicles.