July 18, 2024

Riding the Digital Storm: Where the ride-hailing market is heading?


Ever since the invention of the first horse drawn carriages, people have relied on shared mobility to journey from one spot to another. Some preferred to hitch a ride to the nearest town, while some hired them to transport the goods to the nearest market. Later, we had the motor-driven taxis in three and four-wheeler forms that went around the cities carrying passengers. With the penetration of high speed internet enabled smartphones, there has been a sudden rise of smartphone app-driven services that enabled us to get home-delivery of food, products and other services. One such popular trend is ride-hailing apps.

According to a report from Prescient & Strategic Intelligence[1], the ride-hailing market was 50.4 billion USD in 2018 and predicts it to grow by 120.2 billion USD by 2024. The report also revealed that Asia-Pacific (APAC) region generated the highest revenue, with a large portion of it coming from China, about 70 percent of the total share. China being the global market leader for ride hailing apps, is dominated by Beijing Xiaoju Technology (Didi Chuxing), about 90 percent of the total market share.

Riding the Digital wave

Ride-hailing service providers are seeing an increasing amount of support from the government and the industry. The urge to own a vehicle has reduced significantly. This is largely because of the rising cost of ownership of a vehicle that includes, the initial market cost and the cost of registration, the cost of the parts and services and finally, the cost of fuel. 

Governments across the globe have started taking note of the per person fuel consumption cost and are encouraging the populace to opt for public transport, ride-sharing or ride-hailing options, wherever possible. In one such move, governments have become more vocal about carpooling for daily city commute and some have even come up with guidelines for it. At the Global Mobility Summit on September 7 and 8, 2018, under the NITI Aayog of India [2], there was a strong opinion about the shift to shared mobility that would enable efficient asset utilization by transitioning from a model of ownership of private assets to usership of shared assets. The ride-hailing and shared mobility services are getting a solid boost from a robust digital infrastructure and a conducive entrepreneurial environment. With 5G deployment around the corner and many smart cities under the anvil, the time looks ripe to ride the digital wave.

The entry of EVs (electric vehicles) is only pushing the aspirations for a public and shared model of transport. Furthermore, it is tapping into the growing environment-conscience across the globe and the transport industry and the government only seems to be happy with it. With low maintenance and lower operation costs, the popularity of EVs is only set to grow higher and that is pushing the ride-hailing and shared mobility players to leverage the electric mobility market. In a way, it is being said that the ride hailing services are actually proving to be a boon for the electric vehicle industry because the platform is already favourable for it.

Tackling Roadblocks and Detours

The biggest roadblock for the ride-hailing and shared mobility services is the outdated policy and the regulations that did not forecast the rise of such business models. The structure of the permits, registration and vehicle insurance needs to be permissive for the new digitally-powered transport models. There have been several reports of driver-partners detesting commission-based business models for ride-hailing apps and users logging their dissatisfaction over surge-pricing and the choice of drivers.

The lack of a proper digital infrastructure or a road infrastructure supporting the ride hailing apps is one reason why the growth of this industry is minimal in the rural regions. Another aspect to be considered is the societal stigma behind the ownership of vehicles. People are only considering the social status that comes with it but very few are bothered about the economic and the ecological losses that come with it. This is where organizations and government bodies are forming consultation groups and forums to conduct studies and provide the data that could highlight the best practices for public and private transportation providers.

The lockdown provided an entirely different kind of a challenge for the ride-hailing and shared mobility services when the movement of people was restricted and alternate sources of revenue were being explored. The Coronavirus pandemic pushed the ride-hailing service providers to opt for alternate offerings like parcel delivery and renting services for two-wheelers and four-wheelers. Many of the automotive giants across the globe pushed for the subscription mode of ownership of vehicles where you ride a vehicle of your choice without paying the full amount of the original new vehicle. The subscription mode seems to be attracting a lot of young buyers who, instead of paying a huge sum, are ready to enjoy the ride in small amounts every month. The ownership and the maintenance policies under the subscription model still needs to see a level of uniformity among the OE manufacturers.

Steering the development path

The ride-hailing service providers are considered as a part of the sustainable urban transport utility and hence, the sector is attracting heavy funds from the government bodies and big institutions. With the recent introduction of Ola and Uber into the electric mobility space, the ride-hailing industry is getting an enhanced support from the green investors.

The growth of the ride-hailing apps is driven largely by the Gen Z population that largely believe that owning a vehicle is costlier than renting one. The increasing number of smart cities and townships across the globe is further inviting the services of these ride hailing service providers.

In an exclusive interaction with Rachitta Juneja, CEO & founder of Whide, we found out that in India, the government and the authorities are extremely supportive towards an industry agnostic service provider. She confirms, “With the maximum users in the age group of 20 to 39 and internet penetration, traffic, real estate, parking rates, vehicle ownership cost on the rise, the current generation is looking for a more convenient, cost-effective, and sustainable option. The ride-hailing industry is expected to grow at a CAGR of 8.75 percent during 2021-2026.” Through the Whide platform, Rachitta looks to reduce the carbon footprint by using the same network of service providers to do multiple things like ride and parcel delivery. “Since Whide is vehicle agnostic, we will be adding and promoting EVs in a huge way,”added Rachitta. Whide is a subscription-based mobile app and web platform for individuals and enterprises, which digitally enables them to directly do business with their customers without commissions. It is a one-stop solution for the end customers for all their last-mile needs like ride-hailing, hire driver and parcel delivery with the option to choose the driver without levying surge prices.



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