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Ola, Uber Slash Driver Incentives Up To 40% In Q1 2017- Report

Ola, Uber Slash Driver Incentives Up To 40% In Q1 2017- Report

Delhi, Bengaluru Witnessed Biggest Dips In Driver Incentives By Ola, Uber

Drivers with cab aggregators Ola and Uber have been complaining about the loss of income due to a decrease in driver incentives offered by the companies.

Now, as per a report by research and advisory firm RedSeer Consulting, Ola, Uber have reduced driver incentives by 30%-40% in the quarter ending March 2017. This decrease percentage was in comparison to the earlier quarters. The cut was reportedly done to focus on unit economics.

The report further states that Delhi and Bengaluru witnessed the biggest dip in Q1 ‘17.

The report further added, “If we look at the state of developed nations, where cab markets have matured, we find the incentives offered are in the range of 15% to 20% of the gross booking value (GBV), thus giving an indication that the incentives might further go down. Declining incentives might be decreasing driver satisfaction and incomes, but the monthly take-home income of online drivers is still more than that offered by the offline sector.”

In May 2017, India’s largest public sector bank SBI (State Bank of India) suspended car loans for Ola and Uber taxis across multiple cities. The move was in response to increasing defaults by drivers of the cab aggregators.

2016 and 2017, for the most part, were marked by bans, strikes, driver protests, and legal encounters for cab aggregators in, Chennai, Delhi, Bengaluru, Mumbai among others.

On February 10, 2017, the Sarvodaya Driver Association of Delhi had first called for a strike. The drivers demanded better perks, accident insurance, to be paid as per government sanctioned fare i.e. INR 21/km, among other things. It was called off after 13 days on February 23, 2017. The government earlier assured the parties involved that it cannot resolve the conflict but that it will provide a platform between both companies and drivers where the latter would be able to raise their issues.

The drivers were also demanding to halt the addition of new cars in the existing fleet. Restricting the total number of cabs will help in avoiding the reduction of incentives and earnings.

The report further adds that, due to scaling of driver-fleet, the incentives may witness further dip during 2017.

(The development was reported by ET)

Author

Aparna Mishra

Inc42 Staff

After a 2-year-stint at Ernst & Young, Aparna moved to Journalism. Her prior experience enables her to understand business management. An avid reader and a traveller she hopes to gain insights on the startup ecosystem at Inc42.

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