SUMMARY
I have no doubt that India will be a high-growth market, which will also be profitable: Pradeep Parameswaran, regional general manager, APAC, Uber
Uber is banking on India’s increasing demand and low proliferation of ride-hailing services
The ride-hailing major reported a cash-flow positive quarter for the first time since its founding in 2009
Ride-hailing major Uber is set for its India business to become a fast-growing and profitable one soon, according to Pradeep Parameswaran, regional general manager for Asia-Pacific.
Parameswaran was cited in a Mint report talking about the ride-hailing major’s improving unit economics; he added that Uber’s unit economics improved significantly in India over the last few years.
He added that India will become a profitable market for Uber down the road. Adding further, Parameswaran noted that while the US-based ride-hailing major did not have a timeline for profitability, the same is not too far away either.
The APAC general manager said that Indian ride-hailing companies such as Uber and Ola only have about 0.3% market penetration collectively. This low penetration, coupled with an increasing demand for ride-hailing services is what has made Uber confident of achieving profitability soon.
The June quarter was the first time the US-based mobility major reported a cash-flow positive quarter since its founding in 2009, reporting $8.07 Bn in revenue for the June quarter. The ride-sharing major had reported net losses of $6 Bn in the previous quarter.
Uber’s Big India Question
According to media reports, Ola CEO Bhavish Aggrawal met representatives of the US-based ride-sharing company late last month in San Francisco. The reports seemed to suggest that Uber will be exiting the Indian market with Ola acquiring Uber’s business in India.
However, Aggrawal rubbished the reports shortly thereafter in a tweet, calling the possibility of a merger “completely out of the equation.” Talking with Reuters, Uber also rubbished the claims, and Parameswaran did the same. The merger did not come up for the first time either; in 2018 as well, the talks were ongoing but broke down soon.
Now, Uber is looking at India as a long-term investment, according to the APAC general manager. It is looking to expand the modes of transport and improve the service quality. Following an industry-wide downturn in drivers and rising fuel costs, the overall service quality of ride-hailing platforms has reduced.
Further, the US-based ride-hailing giant has been under intense scrutiny in India ever since a large cache of controversial data was leaked as part of the Uber Files, in a similar tune to the famous Facebook Files leak last year.
Uber further noted that its two-wheeler and three-wheeler mobility segments are the fastest-growing segments in the country. However, regulatory challenges have muted Uber’s expansion into these segments.
Mike Orgill, senior director, public policy and government relations, APAC, said at the same media interaction that the ride-hailing major was facing bureaucratic issues with three-wheeler licences, which has led to a limited expansion of Uber Auto.
Orgill added that the US-based ride-hailing major has asked the government to allow people to drive for Uber and others without commercial licences if they meet the safety requirements and pay taxes.
Update | August 9, 2022, 6:45 PM
The story has been updated to include quote credits to Mint and structural changes have been made.
