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Recovering Indian mobility sector takes another hit with second wave of COVID-19, Uber India adversely impacted

Written by Moulishree Srivastava Published on     4 mins read

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The recovery of India’s mobility sector is likely to go on a downward trajectory in the coming months as many states go into lockdown.

Just when India’s mobility sector was beginning to pick up speed this year, the second wave of COVID-19 has put the brakes on the industry that was poised to grow to USD 90 billion by 2030.

American ride-hailing company Uber on Wednesday noted that its business in India was down amid a raging second wave of the novel coronavirus outbreak. As part of the San Francisco-based company’s first-quarter earnings call, Uber’s CEO Dara Khosrowshahi, said, “extremely elevated case count and renewed lockdowns in India adversely impacted mobility trends there.”

All other mobility companies in the country have met with the same fate.

According to a recent RedSeer report published this week, the sector might see a dip of 30–40% in rides as multiple cities including metros like Delhi, Mumbai, and Bengaluru have gone under weeks of lockdown.

After a complete halt of operations for ride-hailing and bike rental companies last year when the government imposed a two-month-long lockdown in April and May 2020, India’s mobility segment was on a healthy recovery trajectory beginning this year.

The report said the mobility segment recovered 63% compared to pre-covid days with an overall 71 million rides in January 2021. By March, the overall rides reached up to 78 million per month with a recovery rate of 69%.

Recovery trajectory for mobility sector. Source: RedSeer report.

“This has been a gradual increase but is inevitably still lower compared to pre-covid days,” it noted. In comparison, before the pandemic struck the country in 2020 Indian mobility companies were clocking monthly rides of 113 million across autorickshaws, cabs, and bike taxis in January 2020.

While in March 2021, bike taxis and cabs registered 14 million and 40 million rides, respectively, 25 million rides were booked for autorickshaws in the same time period, showing a gradual recovery rate of 89%. Autos, bike taxis, and cabs accounted for 28 million, 19 million, and 66 million rides, respectively, in January 2020.

The primary reason for a significant spike in cab rides in the January–March quarter this year was many companies resuming work from office at 50% capacity across cities, the report noted. Auto has been the highest growth category which gained significant market share as drivers shifted to online platforms, the report added.

However, beginning April, when the country saw a steep spike in coronavirus infections that reached an all-time single-day high of 400,000 reported cases last week, mobility was one of the first segments to get disrupted.

Shared mobility startup Yulu, which has a fleet of 10,000 electric bikes across major cities like Bengaluru, Mumbai, and Delhi, said its vehicles are being used during curfews and lockdowns by general public, frontline workers that include medical practitioners, delivery persons of online companies, government employees, shop owners that run essential services such as medicine and grocery shops, and takeaway restaurants.

“Last year during the nationwide lockdown we partnered with several e-commerce companies such as Bigbasket, Licious, Dunzo, Lalamove, among others, and assisted them in fulfilling the spike in online deliveries,” Yulu co-founder Amit Gupta, told KrASIA. “This year during the lockdown and even local strikes of public transportation, our bikes are being used by the general public.”

The company said despite the pandemic, it experienced a 2.6 times growth in revenue and three times growth in margins since February 2020. “In terms of business, we witnessed a V-shaped recovery immediately after the lockdown was lifted last year. We are expecting similar trends this year as well.”

Looking out for new opportunities

The healthcare crisis has changed the way people travel and work, which is what mobility startups are dealing with at present, believes Ramu Nair, head of business operations, INVERS, a Germany-headquartered shared-mobility tech company, which works with Indian startups in this segment.

“There is definitely a change in commuting habits due to COVID-19, which is challenging shared mobility providers,” Nair told KrASIA. “The number of professionals who regularly use ride-hailing apps to commute has decreased significantly and so has the number of business travelers.”

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“And while experts expect business travelers to go back to pre-pandemic levels once the impact of Covid decreases, the habits of daily commuters might not, based on their experience of work-from-home during the lockdowns,” he added.

Shared mobility startups in the country seemed to have foreseen this, and thus have been focusing on creating new avenues of making money, other than their core business.

“The general trend is to build a more dependable revenue stream. Operators do so either by expanding their client base or their services,” Nair said. As opposed to fixed docking system where a rider has to park the vehicle after ending the ride, operators have been offering free-floating moped [motorcycle] sharing and car-sharing services to customers.

“Right now, operators are approaching it a little more diversely trying to develop their client base towards a more dependable revenue stream, looking more and more at B2B clients,” he said.

For instance, Mumbai-based eBikeGo, which started as a subscription service of electric vehicles (EVs) to consumers, now also offers subscription services to food delivery companies like Zomato, Nair said.

Rising consumer interest in EVs is another factor that might bring back mobility startups on the growth path going forward. To this effect, many Indian EV companies are partnering with manufacturers to either lease or rent these vehicles to provide subscription as well as rental services to their consumers.

“With increasing local EV manufacturers, a lot of shared mobility providers want to work with them. The increased EV offerings just provide them another option for their services, starting with electric vehicles,” explained Nair. “The electric moped space in India is really booming. There is Ampere and Hero Electric, for example. Many newcomers in shared mobility space are planning to expand into the market and launch operations with local electric moped manufacturers.”

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