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HouseTHAT?

The rapid pace at which taxi aggregators like Ola and Uber are increasing their user base is a function of how affordable their services are and, most important, how convenient they are to use—no more haggling on prices or cajoling them to travel short distances.

By: | New Delhi | Updated: August 10, 2017 5:46 AM
ola, uber, ola news, uber, taxi aggregator, rented cab, cab services india, houses, houses delhi Crisil points out that while the cost of hiring a cab is around Rs 19 per km—even less in ride-shares—this works out to around Rs 22 for your own car. (Reuters)

The rapid pace at which taxi aggregators like Ola and Uber are increasing their user base is a function of how affordable their services are and, most important, how convenient they are to use—no more haggling on prices or cajoling them to travel short distances. Also, as ratings agency Crisil has done, users are looking more closely at the relative economics of these aggregators versus even buying their own car. Crisil points out that while the cost of hiring a cab is around Rs 19 per km—even less in ride-shares—this works out to around Rs 22 for your own car. In which case, Crisil says, it is cheaper to hire a cab if your annual travel is less than 15,000 km—if you have a driver, this break-even rises to 30,000 km.

While Crisil expects this to lower the annual growth in passenger cars by 150 bps as people shift to cabs, a certain basic demand for own-cars will stay. For one, having your own car is aspirational; so, people will probably still buy that first car and then extend the time for which they use their existing cars. Two, even though cabs are getting more affordable, more convenient and are generally in good condition, your own car is, well, your own car. Everyone knows that renting a house is much cheaper than buying one, but everyone wants to own their own house. Obviously, this will change as cabs get more flexible—keep it for an hour while you buy your groceries—but keep in mind that in even Mumbai where cabs have always been available at street corners, the demand for own-cars has never gone down.

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