Author Topic: Bengaluru’s taxi wastelands: Loan defaults put a brake on the cab dream  (Read 102 times)


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Many cabs attached with Ola and Uber are lying unused in parking lots and garages, seized by financial institutions and private moneylenders from those who could not repay vehicle loans.

Uber and Airbnb started in the US at a time, when unemployment was high. There were legal structures that kept employment low like for example there were jobs that had zero-hour contracts, where people weren’t allowed to move into full-time employment,” Surie said
When it was launched in San Francisco and New York, said Surie, there was an assumption that people could choose when they would use their cars for private purposes and for earning money. “So, people weren’t expected to buy cars to get on the platform, although that did happen as the company grew,” she said.

Contrasting that with the Indian scenario, Surie said, here those who now drive the cabs were not car owners. “But the sheer size the platform took made people buy cars,” she said.

According to Surie, as is the way with technical disruptions, the companies changed people’s economic behaviour by creating a need. “They built a market and used different kinds of pricing to create a need,” she said. And with the surge in cabs debt rose, Surie said. “There is a heavy debt burden that drivers face,” she said.

Adding to the problem of the model, Surie said, was the fact that it scaled very fast with many people joining the platform.

In Bengaluru alone, the number of taxis registered between March 2013 and July 2018 increased by 209% from 40,185 to 124,270 or about 209%, according to the state’s transport department.

Even this, transport department officials said, was not an accurate number because taxis registered elsewhere in the state that had state permits were also plying on Bengaluru’s roads. As of July, there were 228,449 taxis plying in Karnataka. This increase, drivers acknowledge, was also a big reason for the reduction in earnings.

Both Ola and Uber said no driver had yet brought to the companies’ notice the problems they were facing with debt.

A spokesperson for Ola said: “Driver-partners are the pride of Ola and their welfare is a key priority for us. We have not received any reports of issues regarding vehicle loans. Having said this, Ola stands fully committed towards bettering the livelihoods of its driver partners through a range of initiatives which includes ‘Chalo Befikar’, a comprehensive and free insurance program, that provides medical and life cover up to 5 lakhs and ‘Heroes of Ola’, a multi-city drive, that rewards drivers for exemplary customer service.”

A spokesperson for Uber said incentive payouts were based on a dynamic model and it was sought constantly to improve both earnings and fares, and the idea was to ensure that it helped drivers improve their organic earnings.

“With sustained high demand from both riders and drivers we can shift from startup mode to a more sustainable business model and begin reducing higher levels of incentives, and invest more in drivers and our products for the long term,” the spokesperson said.
« Last Edit: October 03, 2018, 11:04:48 PM by YELLO »