Points of View: Will the likes of Uber and Ola hurt car sales?

By Saumya Tewari , afaqs!, New Delhi | In Digital | August 11, 2015
Will the popularity of taxi services make car ownership a less popular aspiration?

Akshay Chaturvedi, business head, ZigWheels.com

Akshay Chaturvedi

Cab hailing, trip sharing (Ryde, Bla Bla Cars) and easier car B2C rental services like Zoomcar would definitely capture a lot of need states hitherto untapped and unfulfilled. For example: real-time requirement of a cab for travelling to an airport/railway station or a local mall without worrying about parking. The need to avoid multiple car ownership in a household for infrequent requirements. Getting to drive or being chauffeured in a luxury car that one can't afford or inter-city travel on account of unavailability of train tickets.

However, having set the context, I would stick my neck out to say that in the short to mid-term, these will not have any significant impact on car sales or ownerships in India. This flows from multiple reasons - India still remains the most under-penetrated country with respect to car ownership, the entire ecosystem of these services needs to stabilise, whether it's regulatory framework, security concerns or the geographical footprint.

India is an extremely value conscious market. So, while the entry level pricing of an Uber may be enticing, the moment the rates go up in future expect a lowered retention. Millions of households who would enter the middle-class in the times to come would want to cherish their ownership of a car which still symbolises more than just being a mobility need. Lastly, government thrust on infrastructure and projects like smart cities would definitely mean more cars and better ownership experience.

So, I would say that India, which anyway is fairly low on car ownership in the world (China sells as many premium/luxury cars in the country as the overall car sales in India and sells almost 11x of cars sold in India, annually), is not going to witness a decline in car sales anytime soon.

Karun Arya, communications lead, South Asia and India, Uber

Karun Arya

In today's world, as people get busier and the pace of life continues to rapidly increase, commuters would prefer to not waste time driving in traffic and then looking for parking; it does not make sense to be looking to try and hail a taxi or haggle with the driver either.

For decades, the way you call for transportation, use and pay for it, has not evolved. Cab hailing services like Uber have transformed how people move around in their cities by bringing unprecedented levels of transparency and accountability to provide a safe and affordable alternative. This new alternative actually complements and improves existing infrastructure, creates thousands of jobs and ensures the overall quality of service improves.

In cities across India where you have uberGO and uberX, these are some of the most affordable options to move around, sometimes even cheaper than autos and normal taxis. When you factor in other costs for parking, insurance and maintenance, commuting with Uber can quickly become a more cost effective solution to car ownership.

By connecting people with a more affordable, high quality option, more people are re-evaluating buying new cars, which for decades has also been a sign of social standing.

Sakshi Vij, executive director, Carzonrent India (operates Myles, a self-drive car rental)

Sakshi Vij

These services are actually a solution for car buying experience in India. It is an extension of how the car sales will happen in the market. Consumers, today, must have alternate mode of ownership, which may not mean committing to own the vehicle, but the product being available to them all the time. This is where the concept of car renting and sharing stemmed from. Globally, wherever this has happened, it has created an interesting dimension for car manufacturers to sell their vehicles. I can exemplify from Myles' perspective where we have collaborated with Tata Motors, which in turn shows automobile companies' belief in car sharing services as alternate modes of transport.

Myles is a connector between consumers who want to own cars and drive them. For the longest time, the only way to own a car was when an individual earned enough to one. Services like ours are expanding the market, allowing the consumer to experience driving, and these will be the probable customers for automobile companies.

Ranojoy Mukerji, auto expert

Ranojoy Mukerji

Every time a new aggregator enters the market, the sales of cars go up. With the new ruling that aggregators have to own their own fleet of vehicles and not outsource them, the car sales will only go up. I believe cab hailing and renting services, like Uber and Myles, will not affect car ownership decisions in India. The Indian market is very different from that of more developed economies like US. People will like to buy their own car.

Cab hailing services are availed by consumers for different reasons and times, but they will not substitute it for their own car. Therefore, while such services will serve their purpose and aid in easing out transportation woes, they will not affect the car buying decisions of consumers at large.

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