After its defeat in China, Uber Technologies Inc. can'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 -- instead of finding a new one for every journey -- doesn'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 Didi's aggressive moves, Bloomberg's Brad Stone wrote in The Upstarts. Yet all that cash burn wasn'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 doesn't want to make the same mistake in India.
UberHire, it says, will cater to needs as varied as "festival shopping, family get-togethers, big fat weddings or back to back business meetings." Less apparent -- but equally important -- is the appeal of rent-a-car-type business for drivers.
Both Uber and ANI Technologies Pvt’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 -- say, a Toyota Innova -- 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 driver'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 can't say no.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
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