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Old 26th April 2017, 17:50   #16
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Default Re: Car loans become difficult for Ola drivers

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Originally Posted by itwasntme View Post
Interesting to know what would be the 'correct' wage (converted into rate/km) for a radio taxi driver.

It is neither Rs.23/km nor Rs. 6/km but possibly around Rs. 19/km with sane working hours/month and ability to pay back the EMI.

The average 'smart' driver salary in BLR is around 16k+/month so add 20k in EMIs and you have a ballpark figure of gross earnings (net off commissions etc) of say Rs. 45k including exigencies/aspirations.

Is this achievable now? Too many people have got into it now souring the original equation.
From my recent discussions with a few Uber drivers in Hyderabad and Gurgaon, their incomes are falling because of 2 reasons. First of all, these companies have reduced the incentives to a great extent. The drivers keep calling their helpline numbers to log their complaints/protests but get no response.

Second, the number of cars are increasing every day. Given the increase in density, the business per car everyday, is reducing steadily. Now, people who joined the bandwagon early, made good money but now, their incomes are falling. People who saw others for some time and then joined, are disillusioned.
The driver also mentioned that after people are of the low returns, they are getting new cars on loans, trying their level best to recover their down payment and make money during moratorium period and then, letting the banks seize the cars. As per him, more than 10000 cars have been seized in Hyd and Secunderabad area in past 6 months. They cars will be up for sale which will eventually impact the used car market and the new car market.

I would take the numbers with a pinch of salt but what he says might be true. I remember, in June 2016, I was in a new Ritz from Uber. The driver was so happy and contended. He said he had made more than 2.5k from 2 trips and Uber pooling the whole day. He explained in addition to our fare, how Uber "paid" them for every km we were travelling.

In contrast, I took an Uber last weekend. The driver was lamenting that he had been driving for the past 11 hours and hadn't made even 1k till then. Both these drives were on Saturdays.

I pity these cab driver-cum-owners who seem to be misled into believing a mirage.

Last edited by GTO : 27th April 2017 at 10:51. Reason: Typo
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Old 26th April 2017, 21:25   #17
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Exclamation Re: Car loans become difficult for Ola drivers

I feel the drivers have used this Rs 7 /- k.m. charged under Ola / Uber to their advantage by quoting on various occasions that this is a very unfair way of charging.
  • And the media as usual, which doesn't analyze much and just believes in sensationalizing, kept writing (every time these drivers went on strike) as to how the per k.m. fares were so low, when the transport department prescribed rates for AC and Non-AC radio taxis were at Rs 19.50 /- k.m. and Rs 14.50 /- k.m. respectively.
  • This has added to the common belief that there is a big difference of at least Rs 7.50 /- k.m. between a regular radio taxi and an aggregator's cab. No wonder the drivers feel victimized.
On careful examination though, the picture is different.

E.g.: - Any taxi ride for about 10 kms in a city would need about 30-40 mins considering city traffic, signals etc. (ignore super peak hours and super light hours, consider regular traffic).

A non-ac radio taxi would charge:
  • First 4 kms = Rs 80/-
  • Rest 6 kms = Rs 87/- (@ Rs 14.5 /- k.m.)
  • Total Fare = Rs 167/-

An aggregator's cab would charge:
  • Basic fare = Rs 35/-
  • For 10 kms = Rs 70/- (@ Rs 7 /- k.m.)
  • For 35 mins = Rs 35/- (@ Re 1 /- min.)
  • Total Fare = Rs 140/-
And this comes to Rs 14 / k.m. and not really Rs 7 / k.m. as projected.
  1. Supply (of cabs) more than demand, reduction in incentives, assumption that the 75k-90k per month is here to stay are the areas that should be really looked at to make amends.
  2. I doubt if the aggregators had offered or promised 6 figure incomes. The initial euphoria created a wave, many jumped on the bandwagon assuming that it was a promise and the aggregators kept silent.
Some corrections are needed, no denying. However, asking to increase per k.m. fare to Rs 14.50 /- or Rs 19.50 /- will simply take it all back to the pre-agrregator days which wasn't really lucrative for the drivers!

Note: Fares and numbers may vary from one place to another. The numbers used above are illustrative.

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Old 27th April 2017, 12:57   #18
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Default Re: Car loans become difficult for Ola drivers

IMO, it's a bubble waiting to burst.
I'll be the first to appreciate that cab-aggregators add value, professionalism and convenience in an otherwise broken transportation system.

However the losses that Ola/Uber are running into is staggering (Uber 2016 global losses > $ 3 billion) - end of the day the private-equity investors funding these companies (and subsidizing our rides) want a return on investment.

Either the investor taps dry forcing Uber/Ola to shut-shop; or they evolve to a more sustainable business model.

Part of this sustainability is to increase fares - a customer paying Rs. 13 per-KM for an auto-ride should be willing to pay a premium for the experience of a hassle-free, air-conditioned taxi on your door-step.

The other side of sustainability is cutting costs - reduce the incentives to a more realistic level, charge the driver a decent-commission for using their platform, and innovation like cab-sharing.

I believe the model is here to stay, but will undergo rationalization.
Reminds me of the air-deccan days - flights at the cost of a sleeper class ticket. Though Deccan and few others went turkey, the business model of low-cost airlines sustained & we now have customers willing to pay a fair price for both train and flight journeys
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Old 27th April 2017, 15:39   #19
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Default Re: Car loans become difficult for Ola drivers

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Originally Posted by GTO View Post
I still think that the individual driver can lead a fair life + pay his EMIs. It's the ones running the fleets (and thus adding another cost / profit layer) who might be in trouble. Could also be the drivers who are simply lazy, don't want to work hard or abandoned their cars for other jobs.
Agree with your observation. Once a person gets accustomed to a certain level of life, its hard to fall back with same output. As oppose to current situation, initial days were of high salary, on time payments and no trip targets. Instead of getting a raise if one gets a salary cut for more amount of work, the commitment falls drastically leading to switching of job.

This was a long term flaw in company's payment structure. Also the owners/drivers should have known/accepted this situation. The wiser would have cleared their loan in bright days and would be reaping the benefits now.


Slight , I took Uber services last month and chose card payment method for the first time. The driver did not ask for cash nor has the company billed and collected the amount till date. How are they gonna pay on time?
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Old 27th April 2017, 15:58   #20
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Default Re: Car loans become difficult for Ola drivers

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Slight , I took Uber services last month and chose card payment method for the first time. The driver did not ask for cash nor has the company billed and collected the amount till date. How are they gonna pay on time?
They would ask you to pay before you can book your next ride - either via paytm, cash to next driver or authorize the card payment using OTP.
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Old 28th April 2017, 00:00   #21
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Default Re: Car loans become difficult for Ola drivers

A good thread. This was a long time waiting to happen. As mentioned by the members in earlier comments it was mainly due to the unrealistic numbers provided as possible income. I had heard stories of IT professionals leaving their full time jobs and getting into the Ola/Uber business. I believe this was done without giving it a second thought regarding the sustainability of this business.

In our office we have designated number of cabs assigned which get a fixed income on monthly basis with the number of kms that they cover (termed as 'Package'). These drivers too had the idea of leaving the current business and opting for Ola due to the flexibility of hours (who would't like that irrespective of the profession?). But these drivers decided to wait and saw the fall in business.

I have also had a conversation with a Cab Driver in our office who was earlier registered for Uber but then quit and registered his car with the firms where they provide cabs for IT companies and are guaranteed a fixed income as they have to ferry around employees throughout the day/shift.

Below is a rough estimate of the income:
- Covering 8 to 10k kms per month.

- You receive payment of around 40-45k for hatchback/compact sedans. For MUVs this shoots up to 70k as they carry more people.
Note: This estimate of income is excluding the diesel expenses.

- Considering the fact of getting the vehicle regularly serviced and the EMIs the cab owners have to pay, they get an in hand pay of around 20-25k which in my opinion is good.
Again, this is when the owners of the Cab itself do all the driving. The income/profit drops when they hire a driver for driving the cab.

My point is, the Ola/Uber business can be successful without giving ridiculous discounts on already reasonable amount of fare that they charge. They just need to limit the number of vehicles being registered with them and everyone is at peace.
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Old 28th April 2017, 01:04   #22
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Default Re: Car loans become difficult for Ola drivers

This was bound to happen. This trend of radio taxis was a big bubble which was always going to burst.

However, I feel the cab drivers are partially at fault here. I can't believe that they believed they were going to earn 60-80k per month by driving a budget hatchback/sedan for 8-12 hours daily and went ahead and bought cars on loan. I never used much cabs, but took a couple of them when this sector was at boom (and cabs were really cheap) and cab drivers were earning good. The cab drivers were happy and used to say that they save about 60k per month after expenses.
I used to tell them that these incentives are temporary and what will they do when these incentives are going to be stopped by the company they are plying cabs for? Most of them used Ola back then had the same reply "We will shift to other cab companies which will give better incentives like Uber or Taxi For Sure. And there are going to be new companies! "

Most of the cab drivers are not much educated and were lured by the cab companies into this crap storm. No one - the cab drivers, the cab companies, the banks who financed the cars, none of them are earning anything right now. The VCs are having sleepless nights!

Last edited by parth.jain : 28th April 2017 at 01:07.
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Old 28th April 2017, 09:46   #23
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Default Re: Car loans become difficult for Ola drivers

Challenging times for these aggregators is bad news for car companies. They've been banking on them for growth. Maruti alone sold 65,000 cars to Ola & Uber drivers in FY2017.

Quote:
Maruti Suzuki India Limited sold over 65,000 cars to app-based taxi aggregators like Ola & Uber in FY2017, company informed at a press brief.
Source + Full Article
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Old 28th April 2017, 13:40   #24
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Default Re: Car loans become difficult for Ola drivers

I have 2 cabs wagon r running in ola and uber in NCR and i can tell you that there is almost no viability for running these cars with drivers on them , my drivers works for almost 12 hours a day then its hardly 17000 for drivers and 24000 for me . 24000 is approx the Wagon R installment if you take a 2 year loan on 100% finance. Then there are other yearly expenses like insurance and taxes yearly ( approx 37K ) so if you have a good driver and car is maintained still you don't save anything as car is already 1.5 lacs km in 2 year. it used to be 50000 pm in golden days and 20-24 K for driver when we started in Nov'15. So pretty much even if a driver is buying a new car its difficult to pay installment after a year as after that only real expense start and default of installment starts.
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Old 30th April 2017, 09:55   #25
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Default Re: Car loans become difficult for Ola drivers

This is probably the reason every other car on sale in OLX, Quikr etc. is a Ritz Ldi/Swift Dzire Tour. Too many ads with the requests of continuing finance/paying emi. The ones who joined early made bags of money, but some of them fell into a trap by increasing their fleet expecting the same profits/incentives.

But, I still would suppose that if a driver is willing to bend his back then he still would have a chance to earn a significantly more amount than an entry level software engineer would. As many said, the bubble of the startups may burst anytime soon unless their business models are rationalized towards profits rather than market share.

And I hope the losses incurred by the banks do not impact the lending rates.
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Old 30th April 2017, 12:03   #26
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Default Re: Car loans become difficult for Ola drivers

There are a lot of issues in this model that need to be addressed
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Originally Posted by sudeepg View Post
A rough calculation for having a salary of 50,000 a month/driver will likely require that the cab plies on an average of 10-12 trips a day. ...
... Also factor in the troubles that come with plying a cab on the road and the time for maintenance due to constant running - Repairs from accidents, annual insurance etc (not to forget the fuel cost). It looks like most of them are running on a very thin line.
They were doing 3 rides per car per day in 2015. And this was touted as a major achievement.

http://www.team-bhp.com/forum/indian...s-per-day.html (Ola: 7.5 lakh rides per day!)

Not sure what the number is now. The rise in ridership has been negated to a large extent by the huge influx of more cabs. My bet is on around 5 rides per day. But given that the incentive schemes reached 18 rides per day, there appears to be a disconnect somewhere in the number of rides per car per day. So it will be interesting to find out where this number stands today.

Quote:
Originally Posted by Coolman View Post
I feel the drivers have used this Rs 7 /- k.m. charged under Ola / Uber to their advantage by quoting on various occasions that this is a very unfair way of charging.
Very astute analysis. Despite all the hype, the actual rate for all the aggregators comes to above 10 Rs per km, when there is no scheme running. And in congestion it gets even higher. Hats off to the guy who first came up with the time charge component. It is a witty adaptation of the waiting charge that is charged by the kalipeeli cabs in mumbai.

Quote:
Originally Posted by Anuruddhs View Post
I have 2 cabs wagon r running in ola and uber in NCR and i can tell you that there is almost no viability for running these cars with drivers on them ,...
.... So pretty much even if a driver is buying a new car its difficult to pay installment after a year as after that only real expense start and default of installment starts.
That is a very subtle point that most of the first timer entrants into the field miss. Given the running these vehicles do on a daily basis, the maintenance costs also hit much earlier in the lifecycle of a car.
Quote:
Originally Posted by GTO View Post
Based on my conversations with Uber / Ola drivers, I still think that the individual driver can lead a fair life + pay his EMIs. It's the ones running the fleets (and thus adding another cost / profit layer) who might be in trouble. Could also be the drivers who are simply lazy, don't want to work hard or abandoned their cars for other jobs.
On the bright side, customers like us get cheap rides (although, the pricing is unsustainable) .
Nice post & completely agreed. They set the expectations unrealistically high.
IIRC , we have a TBHP member based in Ghaziabad, who is running a fleet of 30 cars, who was looking to buy a towing vehicle for his fleet. AshutoshB, need your inputs here. (OT, also update us on what you did with your requirement for towing vehicle)
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Old 30th April 2017, 13:24   #27
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Default Re: Car loans become difficult for Ola drivers

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Originally Posted by parth.jain View Post
This was bound to happen. This trend of radio taxis was a big bubble which was always going to burst.

However, I feel the cab drivers are partially at fault here. I can't believe that they believed they were going to earn 60-80k per month by driving a budget hatchback/sedan for 8-12 hours daily and went ahead and bought cars on loan. I never used much cabs, but took a couple of them when this sector was at boom (and cabs were really cheap) and cab drivers were earning good. The cab drivers were happy and used to say that they save about 60k per month after expenses.
I used to tell them that these incentives are temporary and what will they do when these incentives are going to be stopped by the company they are plying cabs for? Most of them used Ola back then had the same reply "We will shift to other cab companies which will give better incentives like Uber or Taxi For Sure. And there are going to be new companies! "

Most of the cab drivers are not much educated and were lured by the cab companies into this crap storm. No one - the cab drivers, the cab companies, the banks who financed the cars, none of them are earning anything right now. The VCs are having sleepless nights!
Every second disgruntled uber/Ola driver in bangalore/hyderabad keeps saying: wait till reliance launches their app based cab service. Where do they get their news from, I wonder
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Old 1st May 2017, 13:21   #28
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Default Re: Car loans become difficult for Ola drivers

I recently bought a Xcent taxi because I wanted to test how this business works.
This is the 25th day of the taxi strike in Ahmedabad. Yes. For the last 25 days, Ola and Uber drivers are on strike and cab availability is very limited. My driver was assaulted on the road while he was on a trip for Uber, and since then, he is not driving for any app based taxi company. This is a setback because I never expected this situation to continue for so long. I do not have a loan on the car, so I'm not affected by this decision, but many drivers will be affected. On one hand, customers expect convenience that these companies provide and on the other hand, the drivers stop the business due to their unrealistic expectations. I might sell the car if this continues, but there will be many who depend on this for their livelihood, and it is not going to end well for them.
I hope there's some regulatory decision about strikes, fares and safety of the drivers for these companies soon. It is sad that Uber and Ola both don't care about the driver at all- they simply send a message to call the police in case there's a roadblock set up by striking cab drivers.
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Old 1st May 2017, 13:54   #29
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Default Re: Car loans become difficult for Ola drivers

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Originally Posted by dZired View Post
The State Bank of India (SBI) has stopped issuing fresh car loans for drivers working on Ola's ride hailing platform in Bangalore. This decision comes after the banking institution recorded huge losses with nearly a fifth of its loan book defaulting in the city. The bank had already stopped lending money to Ola drivers in Mumbai a few months back.


Source: ET
I am not sure how SBI or any state bank will ascertain whether the loan seeker is an aspirant Ola/Uber driver.?

I may apply for a loan for a car tomorrow and will tell the SBI official that i intend to rent/lease my taxi our to a BPO/Software/Bank/Govt organisation and will join Ola/Uber after my loan is sanctioned.

Many of us know how the loan sanction process works with a bank.(nationalized bank to be precise.)

Waseem.
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Old 1st May 2017, 14:53   #30
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Default Re: Car loans become difficult for Ola drivers

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Originally Posted by SILVERWOOD View Post
I am not sure how SBI or any state bank will ascertain whether the loan seeker is an aspirant Ola/Uber driver.?

I may apply for a loan for a car tomorrow and will tell the SBI official that i intend to rent/lease my taxi our to a BPO/Software/Bank/Govt organisation and will join Ola/Uber after my loan is sanctioned.

Many of us know how the loan sanction process works with a bank.(nationalized bank to be precise.)

Waseem.

From what I understood talking to a few Ola drivers, the company had tie ups with various banks which would process the loans for cabs wanting to attach to Ola with lesser hassle and paperwork. Now thats not going to work so. Earlier with minimal paperwork and documents, the drivers were able to drive out of a showroom with a brand new car.

Each dealer had ties with these aggregators and then a bank. Just like how dealers have some bank guys who can offer finance. Guess this bombed and no longer can the same loans be availed without a good round of scrutiny.
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