Stating that its 100% committed to India, ride-hailing firm Uber has dismissed report of its exit from the Indian market as “baseless speculation”. An Uber spokesperson told ET, “Our business in India is stronger than ever and we are 100% committed to serving our riders and driver partners in India.”
The talk around exit was fuelled by a report of Rajiv Misra, CEO of the SoftBank Vision Fund, which recently became Uber’s largest shareholder with the formal closing of a $9.3 Bn investment, stating that the company should focus on recovering its market share in the US and growing in key European markets, to have a faster path to profitability.
As per a Financial Times report, Rajeev Misra stated that the transportation group had a faster path to profitability if it returned to its core markets such as the US, Europe, Latin America and Australia.
Misra also added Uber exiting unprofitable countries was not solely about cutting its losses — which hit $1.5 Bn in the third quarter of 2017 — but that growth prospects were more promising in its core markets.
Interestingly, SoftBank is also the largest shareholder in Uber’s rival and market leader in India, Ola. And it is not the first time that Misra has alluded to a potential deal between the Uber and Ola. Last September too, Misra had made an interesting statement about the Japanese conglomerate’s intentions towards making peace between rivals Ola and Uber.
An unnamed Uber employee told ET, “An exit from the Indian market seems impossible since there are global rollouts of the company’s products being tested in the Indian market and Uber India has also made a return to focusing on the auto segment. These are definite indicators that the company is unlikely to exit the Indian market but still does not eliminate the likelihood of a merger in the future.”
Uber , India, And Losses
While India remains Uber’s largest market outside of the US, it is also the biggest cost for the company. At the end of 2016, Uber’s net revenue reached $6.5 Bn; an impressive number if we don’t consider the $2.8 Bn losses it encountered during the same period. In the case of India, total revenue reported in FY15 was only $3 Mn (INR 18.7 Cr) higher than losses incurred. In July last year, the cab aggregator poured $7.99 Mn (INR 51.64 Cr) into Uber India as per filings with the Registrar of Companies.
Uber lost more than $1 Bn two quarters in a row last year. The ride-hail company widened its net losses to $1.46 Bn, up from $1.06 Bn in the second quarter. In the last two years, it has also left some of its biggest emerging markets. In August 2016, it sold its China business to rival Didi Chuxing. Similarly in July last year, it called it quits in the Russian market, as well. The cab aggregator announced a $3.7 Bn merger deal with Russian rival Yandex.Taxi, which is owned and operated by Baltic search engine giant Yandex. Meanwhile it is also locked in battle Southeast Asia with Grab and lost market share in the US to rival Lyft last year post a scandalous 2017.
In contrast to its Indian competitor Ola which operates in 90+ cities in India, Uber currently operates in 29 cities of India, and 600 cities globally. It recently rolled out four new features which include ‘request for a guest’, ‘call to ride’ and AI-enabled offline search facility for its Indian users. Additionally, Uber is also currently in the process of relaunching its auto service, UberAuto in India. As per reports, the service will be first launched in Bengaluru and Pune.
Thus given its current approach in India, it seems unlikely that Uber plans to exit India any time soon though it cannot be denied that under the leadership of its new CEO Dara Khosrowshahi and investment from SoftBank, profitability and cutting losses will remain the ride hailing company’s main concerns this year. Will that be driven by focusing on core US and European markets or emerging markets like India will become clearer in the coming months.