New players, technology push growth in radio cab sector

THe radio taxi segment posted a 35% compounded annual growth rate in the last five years.

Written by George Mathew | Mumbai | Published: December 8, 2014 1:17:26 am

Although the radio and mobile taxi segment constitutes only 5 per cent of the Indian taxi market, the segment is witnessing a significant growth with competition hotting up and new players and technology making an entry every now and then.

“The radio taxi segment posted a 35 per cent compounded annual growth rate in the last five years. We expect this to continue in the next five years,” said Sidhartha Pahwa, CEO, Meru Cabs. The segment has four or five big players (Meru, Ola, Easy Cabs and Bookmycab) and similar number of medium players. The list is growing. “We have around 10,000 cabs operating daily while the industry as a whole has around 50,000 cabs. There’s a mushrooming growth of new players,” he said.

Pahwa added that the action is now in the digital space. “We get around 60 per cent of the bookings through the digital space now. We have seen that the younger generation prefers radio taxi and cashless transactions ,” he said.

Anand Subramanian, director — marketing communication, Ola, “We are growing at a rate of 40 per cent month on month and have over 42,000 cabs in our platform across 26 cities we operate in. We are expanding at a rate of 5-7 cities per month and our plan is to be present across 100 cities by the end of FY16.”

Some companies like Ola and Meru have launched low-cost services. There are companies like Taxiforsure which has signed up normal taxis under its umbrella. Leading companies don’t own taxis but provide software and trained driver-owners with KYC safeguards. How do they ensure safety? “We ensure that the partner driver who is using our software should pass the stringent compliance check of his personal and professional papers. Each and every ride of ours is tracked and all the records are maintained meticulously. Traceability is paramount for us. We also have a continuous ride feedback from customers to keep a high quality experience,” Subramanian said.

Pahwa said some customers have switched over from owning cars to radio taxis in view of the cost and other advantages. For example, a car owner spends around Rs 40,000-45,000 per month directly or indirectly on the car. This includes Rs 15,000 for the EMI, Rs 10,000-12,000 on the driver, Rs 8,000-10,000 for fuel and Rs 3,000-5,000 for maintenance. “A car owner drives 1,200 per month. This works out to Rs 33 per km. For a radio taxi service, the running cost per km is around Rs 20,” he said.

On the new technology, Subramanian said, “The mobile app shows the available cabs nearby and allots a cab, which is closest to the customer and provides him with navigation to reach the customer without having to call for directions. Customers can also book a cab later by setting the date and time.”

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