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Competition changing e-hailing ride dynamics across globe

By Adeyemi Adepetun
17 November 2022   |   2:47 am
New waves of competition across the globe are fast changing the dynamics of the e-hailing ride sub-sector of the economy.

. New entrants cut the market size of existing players

New waves of competition across the globe are fast changing the dynamics of the e-hailing ride sub-sector of the economy.

This is evidenced in the current market trends seen around existing players like Uber and new entrants including Careem, Didi, Taxify, LoadMoto, and Bolt, among others.

In Nigeria, the monopoly associated with Uber has been broken significantly with the entrance of players including Bolt, LoadMoto, LagosRide, OgaTaxi, and SmartCab, among others.

Indeed, according to an analysis by Alpha Partners, Uber became the giant of ride-hailing in part by capturing markets around the world. But now Didi Chuxing of China is challenging that dominance, pumping money into a variety of Uber rivals or directly entering markets ranging from Brazil to sub-Saharan Africa.

The information showed that the countries in which Uber and Didi operate, where Uber has substantial equity stakes in the local leader, and where firms that took Didi’s money are fighting Uber.

Accordingly, while Uber is maintaining its supremacy in areas like Latin America but losing near-monopoly status in some parts of that region as well as in Africa and Australia, previously undisclosed internal data reflected the steep drop Uber has faced in the Middle East over the past year.

Further, the analysis noted that in Africa, Uber has a firm grip on such countries as Ghana, Uganda and Tanzania, but it is Uber’s smallest region by revenue, with many impediments to growth. It, however, stressed that San Francisco, by itself, is bigger than sub-Saharan Africa by revenue.

According to the report, one of Didi’s proxies, Taxify, has been gaining a share in countries like South Africa, Kenya and Nigeria. Taxify, in which Didi holds a roughly 20 per cent stake, is based in Estonia, but also operates across Europe, sub-Saharan Africa and Australia.

The Taxify CEO, Mr. Villig, said the company is on track to generate $1 billion in gross revenue this year from its operations across multiple regions. He declined to say whether Didi is expected to put more money into his company this year, but Taxify is widely viewed as a potential acquisition target by Didi, especially if Didi deems its acquisition of 99 in Brazil to be successful.

The rivalry between Didi and Uber first became evident in Brazil, where Didi took a substantial minority stake in Brazilian taxi-hailing incumbent 99 a year ago and then acquired it last month, marking the first time Didi has operated outside of China and Hong Kong.

In Mexico, where Uber has a virtual monopoly, Didi is now setting up operations to try to change that. It’s unclear how much more appetite Didi will have for overseas expansion in the short term, given some of its recent growth issues and intensifying competition in its home market.

Other battlegrounds are the Middle East and Africa. For instance, from Egypt to Pakistan, Uber is battling a Didi-backed, Dubai-based rival, Careem. The Alpha analysis showed that Uber’s internal numbers revealed that the company’s market share in terms of revenue fell to around 50 per cent from 69 per cent last year.

Someone familiar with the region claimed that Uber lost its share in revenue in Saudi Arabia. Still, the Middle East ride-hailing industry is relatively small, generating less than $1.5 billion in gross revenue last year between Uber and Careem, according to executives involved in the industry.

But an Uber source said the company’s share in the region has been growing so far this year, at Careem’s expense. Careem disputes this, but neither firm will share revenue data about their operations in the region, which is Uber’s second smallest by revenue after sub-Saharan Africa.

According to the analysis, another battleground is India, where Uber is fighting Ola. Uber likely generated more than $1 billion in gross revenue from India last year, based on past financials.

The report said Ola is ramping up pressure on Uber by pushing into Australia, a small but high-revenue-per-user market that Uber dominates.

Uber already has exited some markets by selling to local rivals. It was sold to Grab in Southeast Asia earlier this year; to Yandex in Russia last year, and to Didi in China in 2016. After the first two sales, Uber executives said they would be able to spend more money in the company’s remaining markets in order to prevent another surrender to a rival. Uber ended up yielding more territories anyway.

Alpha submitted that ride-hailing is an especially interconnected industry. It stressed that from the sale of its China operations, Uber owns a roughly 15 per cent stake in Didi, worth more than $7 billion on paper, and Didi owns a small stake in Uber.

“However, the companies’ executives have vowed to compete against each other globally. Didi and Uber also share the same outside investor, SoftBank, the Japan-based conglomerate. It owns about 15 per cent of both Uber and Didi. SoftBank also is a major investor in Ola. With none of the firms anywhere near profitable, SoftBank is expected to support further consolidation around the world, and a reduction in the financial subsidies all ride-hailing companies use to attract new riders and drivers,” it stated.