Uber’s Popularity in India Has Led to a Mini Vehicle Boom

Updated on
India Uber Asia

An Uber taxi driver drives his car through a street in New Delhi, India. Riding on its startup success and flush with fresh capital, taxi-hailing smartphone app Uber is making a big push into Asia.

Photographer: Saurabh Das/AP Photo

Uber Technologies Inc. has posed a threat to auto sales by enticing car owners to ditch their keys. In India, its popularity has sparked a vehicle boom instead.

Maruti Suzuki India Ltd. has seen a surge in demand for its DZire Tour sedan because of the rising popularity of car-booking apps, said R.S. Kalsi, executive director at India’s largest carmaker. Toyota Motor Corp. is offering special deals to woo drivers and fleet operators that are boosting orders for its Etios sedan, which starts at 611,000 rupees ($9,400).

Uber and other booking apps have announced plans to expand to smaller cities in India, where public transportation is often inadequate. The services have created a boom in demand from for-hire car companies expanding their fleets and from individual operators buying new cars to drive for the apps.

“The plans of all these companies are big,” said N. Raja, director and senior vice president for sales and marketing at Toyota’s India unit. “We’re happy to see them talking about expanding the number of cars in the next 12 months.”

In the four months through July, Maruti Suzuki’s DZire Tour, sold only as a taxi, surged 152 percent while Toyota’s Etios compact sedan gained 28 percent. Industrywide passenger-vehicle sales expanded 7.5 percent in the same period.

The surge in demand for these cheaper models is helping to drive a recovery in vehicle sales in India. Automakers like Maruti Suzuki get about a third of their sales volume from rural areas, where incomes are correlated to rainfall during the monsoon season and a good harvest.

Shares of Maruti rose 1.9 percent in Mumbai trading to a record close of 4,634 rupees. The benchmark S&P BSE Sensex fell 0.2 percent.

Uber Driver

Sultan Inamdar, 25, quit his job at a car-hire company five months back to drive for Uber and Ola. He said he bought a Toyota Etios because it was on discount and for its fuel economy and low running costs.

“I like being my own boss and many of my friends now drive for Ola and Uber as well,” said Sultan. “The stress is in getting enough trips a day.”

Ola, the biggest Indian ride-booking app, is seeing rising demand for new vehicles coming especially from new drivers who sign up for its service. The company, which counts billionaire Masayoshi Son’s SoftBank Group as an investor, is working with automakers to offer discounts and easier access to car loans for its drivers.

“In some cities, there’s a demand for hatchbacks while in others, sedans may be more popular,” said Anand Subramanian, a spokesman for Ola. “Every city is different.”

Uber declined to comment on the impact its service is having on new-car sales.

Sushil Rajak, 24, quit his job in an event management company six months ago and bought a new Skoda Rapid sedan so he can become an Uber driver. He’s now considering trading in the Skoda for a Maruti DZire, which is cheaper to operate.

“Instead of going to someone every month and asking for your salary, you get to be your own boss,” he said. “If you work hard, the rewards are all yours.”

Before it's here, it's on the Bloomberg Terminal. LEARN MORE