Ola, Uber growth in India screeches to a halt in 2017

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Ride-hailing apps in India – mainly Uber and its arch-rival Ola – had a fall in rides for the first time in the first quarter of 2017. The number of rides fell by 5 percent compared to the first quarter of 2016, according to market research firm RedSeer.

This follows a whopping four-fold increase to 500 million rides last year for Ola and Uber, compared to 130 million in 2015. The fall in rides this year follows the cutback of incentives for drivers, which led to strikes.

According to the Redseer report, the reasons for this are two-fold:

• Supply crunch caused by driver strikes across major cities in January and February.

• Dropping consumer demand in terms of monthly active users for the leading players.

The driver strikes were precipitated by a 45% q-o-q fall in driver income, caused by a sharp reduction in ride incentives- which in turn was pushed by a growing industry focus on profitability.

The ride-hailing leaders are both trying to figure out the right balance between pursuing growth and finding a path to profitability. Uber has started a car leasing program in partnership with Mumbai-based Xchange Leasing, while Ola is reviving its own leasing subsidiary, Ola Fleet, in efforts to increase the supply of cars and woo drivers with a new business model.

Ola’s losses tripled to US$360 million in FY 2015-16 on a revenue of US$118 million, according to regulatory documents. It managed to raise fresh funding of US$250 million from SoftBank last month at 30 percent lower than its peak valuation in 2015.

Tech in Asia has reached out to both Ola and Uber on this and shall update the story when they get back.