Monday, 31 Jul, 12.46 pm Financial Chronicle

Ola, Uber drivers sell their cabs as incentives dry up

Amitaditya Sanyal, a Kolkata-based Ola cab owner, is a peeved man today. Thousands of financially distressed cab drivers like him, registered with taxi aggregators Ola and Uber, are listing their vehicles online for sale as trip incentives by companies dry up.

“Now that they (the company) have done away with the trip-based incentives, it no longer makes sense to attach my car with Ola,” he points out.

Sanyal says that as on Sunday, booking minimum business guarantee (MBG) from Ola stood at Rs 2,500 (for 14 trips), Rs 3,200 (18 trips), Rs 4,100 (22 trips), Rs 5,200 (26 trips), Rs 7,000 (30 trips) and Rs 9,500 (35 trips and above).

“They deduct 20 per cent plus taxes (as applicable) while paying us. This means that for every 14 trips, we get around Rs 1,900. Now for 14 trips, a driver charges Rs 65 per trip on an average and 14 trips entail a fuel expense of Rs 900-Rs 1,000. Now if you add your maintenance cost, insurance, tax, EMIs and other contingency elements, your earnings are negative,” he gives the break up.
According to Sanyal, it boils down to pure arithmetic. For drivers, it makes sense as they are earning more than the owners. If the owner himself is driving, it is even better. But the earning is not enough considering the amount of hard work and time one has to put in. “For me it was like an investme­nt to earn some additional income. But that commercial proposition no longer holds good. I have therefore started using my car for my other businesses. If I had not have other businesses, I would have possibly sold it out,” Sanyal admits candidly.

Cab owners from Gurgaon to Kolkata, Navi Mumbai to Hyderabad have listed cars with commercial lice­n­ses, with prices ranging from as low as Rs 50,000 to about Rs 8.5 lakh for sale, de­pending on the condition and age of cars. Unable to make ends meet with the ti­g­h­tening of Ola and Uber’s incentive structure, drivers and operators are looking to sell these cars, and cut their losses, while they can.

While professionals, who used this investment route to earn a side income by financing cars and attaching them with Ola and Uber, are also feeling the heat. “My cab’s owner is unhappy as his income has fallen. I have not taken a salary cut but have to work all 30 days now to make up for the decline,” says another Delhi-based driver, whose cab is attached with Uber.

A Bangalore-based own­er of a fleet of cars, all of which are atta­c­h­ed to one of the two cab hailing firmss said some drivers he hired for the purpose have quit. “They are not happy. The kind of money that attracted them to this business is no longer there,” he said, requesting not to be named.

The drivers admit that the ince­ntives were great in the beginning, but now to make Rs 100, they have to give Rs 25 to Uber. The maintenance, upkeep, servicing and fuel cost of the car being separate, they say they have no option but to sell the cars. A large part of the cab fleet under Uber and Ola is sourced from the erstwhile local taxi operators, who now directly recruit one or more drivers or offer them a cab on a lease, to attach it to the on-demand cab hailing firms. The fleet owners typically charge a commission or a fixed fee from each driver.

Additionally, there are a number of independent drivers also under Uber and Ola, who have bought a car of their own with a commercial licence to cash in on the earning opportunity created by both the companies.

In an email response to the question sent by a wire service, Uber said that the listings on OLX were a minuscule part of their fleet in India. “We currently have 2,45,000 active driver partners (who would have taken at least one ride in a week) and are seeing new sign ups every day. We are not seeing any significant churn,” said an Uber spokesperson.

Another Ola executive agrees that with 'rationalisation' of incentives between the two competitors, earnings have come down for drivers. "It is unlikely that drivers who ran their own vehicles on our platform would be selling off. Instead, they are either driver association heads or even individuals who were plying multiple vehicles and were then paying salaries to the drivers. Initially, they must be making a good amount of money. But with a rationalisation that has now come down," he said, requesting anonymity.

Disclaimer: This story is auto-aggregated by a computer program and has not been created or edited by Dailyhunt. Publisher: Financial Chronicle