After its defeat in China, Uber Technologies Inc. canâ€™t afford to lose a second billion-people-plus market to a local incumbent. So the ride-hailing company has introduced a service in India to suit tastes there.
Letting customers book the same cab for as long as 12 hours â€” instead of finding a new one for every journey â€” doesnâ€™t have the same glamour as a flying car initiative. But failing to match the offer from its main India rival Ola of a two-hour chauffeured car rental for 599 rupees ($9) could have been suicidal.
At one point in China, Uber pledged to give away 1 billion yuan ($145 million) of rides to counter market leader Didiâ€™s aggressive moves, Bloombergâ€™s Brad Stone wrote in The Upstarts. Yet all that cash burn wasnâ€™t enough, forcing a retreat that left Uber with a sizable stake in Didi but no China presence of its own. The launch of UberHire shows the San Francisco-based startup doesnâ€™t want to make the same mistake in India.
UberHire, it says, will cater to needs as varied as â€œfestival shopping, family get-togethers, big fat weddings or back to back business meetings.â€ Less apparent â€” but equally important â€” is the appeal of rent-a-car-type business for drivers.
Both Uber and ANI Technologies Pvtâ€™s Ola have bulked up their fleets to a point where owners are nervous about an oversupply of cars and a diminished ability to service the debt they took on to buy their vehicles. In Mumbai, drivers grumble that operating a slightly bigger car â€” say, a Toyota Innova â€” full-time for Uber is no longer profitable. A chunky, predictable cash flow from a single customer beats competing furiously for commuter traffic, or getting dragged away (for a measly fare) to a far-flung suburb, from where returning to the city is likely to be at the driverâ€™s own cost.
Keeping drivers on its side is crucial for Uber because losing India would be expensive. CEO Travis Kalanick is unlikely to pull off a second deal to trade its market position for an ownership stake in a competitor. Equally, part of its brand is built around being a global service provider, available anywhere in the world. India offers Uber a chance to prove to consumers and investors that its business model is flexible enough for it to trump the home-ground advantage of local rivals, such as Grab in Southeast Asia. Grab said on Tuesday it was starting a 13- to 40-seater coach rental service in Singapore.
Most importantly, winning a market over with customization may be far cheaper than trying to wrest it with freebies. If that means catering to the quirky demand patterns of a chaotic Indian wedding, then Uber really canâ€™t say no. â€” Bloomberg
Andy Mukherjee is a Bloomberg Gadfly columnist
covering industrial companies and financial services. He previously was a columnist for Reuters Breakingviews
Tim Culpan is a technology columnist for Bloomberg Gadfly. He previously covered technology for Bloomberg News