Cab hailing firm Uber Technologies will continue to invest in India though it continues to lose money here, because the company considers the country an important and core market.
Cab hailing firm Uber Technologies will continue to invest in India though it continues to lose money here, because the company considers the country an important and core market. Interacting with a group of journalists on Thursday during his maiden visit to India, CEO Dara Khosrowshahi, who took over the reins only five months ago amid a litany of regulatory problems, also put to rest all speculations regarding merging its operations with rival, homegrown cab hailing firm Ola, on the prodding of Japanese investor SoftBank. SoftBank has investment in both Uber and Ola. SoftBank Vision Fund, which recently became Uber’s largest shareholder with the formal closing of a $9.3-billion investment giving it a 15% stake, has reportedly stated that Uber should focus on recovering its market share in the US and growing in key European markets to have a faster path to profitability.
“While SoftBank may have an opinion, theirs is not the only opinion in the room. It is my belief that we as a company need to have a balanced profile in terms of growth and investment. We will actively invest in markets like India and Latin America because of their size,” Khosrowshahi said. He added that though operations in India are not profitable, it accounts for more than 10% of Uber’s trips globally. “I expect India to account for higher and higher trips going forward,” he said. While India remains Uber’s largest market outside of the US, it is also the biggest cost for the company.While he declined to disclose how much the company has invested here so far and what the future plans are in this regard, and how much money it is losing, he added that a lot of investments have gone and a lot will continue to go on.
The CEO said Uber accounts for less than 1% of miles driven in the world, and is an alternative to taxis. “What we really want is to be alternative to car ownership,” he said, adding that problems of traffic and pollution that India faces can be solved with its pioneering share rides. Uber accounts for less than 1% of the $5-trillion transportation industry globally and capturing a higher share requires investments in big markets with large populations that have a lot of growth ahead of them, Khosrowshahi said.
When asked about its troubles in several regions with regulatory authorities that want to categorise it as a taxi firm rather than a trading platform and want it to see the drivers as its permanent employees, Khosrowshahi said that in many countries they are being regulated by the transport authorities, which is fine. However, he said that drivers are its partners and not employees. He said that they are micro entrepreneurs and come on its platform because they can choose when to work and when not to. “To fix them on older labour laws will be a mistake. It is like putting a new model into an old model,” Khosrowshahi said.