The ride-hailing market Disruptive changes generated (and pending to discover) by this sector

Scandals and situation

Uber, in addition to relating with ease, has been associated assiduously with scandals. There have been many episodes of them:

Etc. This leads to think that these ride-hailing businesses, with their disruptive business models, generate problems.

However, it should be noted that Uber, like other ride-hailing businesses, is renewing the mobility market to make it more accessible to the common user.

According to data on its official website, Uber employs 16,000 employees, and has a fleet of 3 million drivers around the world. Thus, Uber’s “fixed workforce” represents 0.53% of the entire bunch of people that form Uber.

We should remind that, although Uber is the most well-known example of private transport business, it is not alone in the market. There are also others such as Didi in China, Cabify, Lyft or Gett (which acquired the Juno company for $200 million), which makes the volume of drivers dedicated to this type of business larger.

And, therefore, it is not surprising that taxi drivers have angered. The reason is simple: competitors, which offer a service that is preferred by customers, are the first choice for people looking for a mobility solution. All without having to pay for a taxi driver’s license.

Despite the evolution of the companies in the sector, potential drivers look with greater suspicion to dedicate themselves to this activity. Why?

According to a thread from Quora, around 2014, Uber drivers received a greater amount of money for each journey made. However, as time passed and due to the pressure of competition, more expenses and commissions have been added, which has meant that, for many people, it is no longer profitable to consider being an Uber driver as a profession. And a similar analysis could be done with other competitors such as Lyft.

Possible future – “The trip as a service”

Even though the private transport sector has been revolutionary, one could think of ways to disrupt it. Considering the incipient trend of the generalisation of electric and autonomous cars, a serious competitor of these applications can be imagined: the vehicle manufacturers themselves.

Several companies are developing auto-pilot functions (such as Tesla or Waymo), and are teaming up with established manufacturers (e.g., Waymo and Fiat – Chrysler) to be able to offer this autonomous driving experience. In this case, what can be easily thought will be to offer “the trip as a service”.

It would not be unreasonable to think that a person has a car and that this car is circulating autonomously, generating passive income for its owner. It would not be unreasonable to imagine too that car manufacturers generate a new business branch, or even brand-new companies to offer services like Uber, Didi, Cabify, Lyft or Gett almost immediately. This would be possible given that these new companies already have cars and technology ready to use – only requiring passengers.

This situation would question the business model of current private transport applications. Since, like in Uber’s case, a large part of the vehicles is owned by drivers, not by Uber itself. This would lead to 2 serious conflicts for Uber:

  1. It would force Uber to make a large investment in fixed assets, to continue supplying the market it already covers.
  2. A lot of current Uber drivers would need to be fired, which would lead to conflicts with them.

Although, making a quick reflection, one might think that they are trying to mitigate the second conflict, offering lower incentives for Uber drivers, and thus making the driver position an unattractive job option, contrary to what it was in the past.

Finally, one last aspect of conflict related to the second conflict could be that of driver associationism. No association or union of drivers has yet been created, but given this trend, it could be probably labelled as a nonsensical action.

This is so due to the rapid progress of this technology, and by the time some drivers are associated, their role will probably not be as relevant in the sector.

In a nutshell

We are entering a phase in which it can be seen how a sector that feeds a lot of people has a high probability of being transformed in a few years, leaving many people involved unemployed. And this is not but another sign of the inherent volatility of our economy.

Volatility that seems to increase as time passes, and that possibly generates recurrent shocks in the labour market, unless new alternative economic models are designed that can understand (and prevent) this type of shocks.

Ride sharing companies market
Source: GBKSoft