The market went crazy about carpooling and car sharing. Therefore this has led to the surge of popularity in ride-hailing services at the global market.
As demand grows for ride-hailing services, Uber, Lyft, Ola, Grab, GO-JEK, and many more have changed the landscape of urban transportation.
This has also led to investments and support from major investors and automotive industries.
For example, Uber Technologies Inc, the world’s most valuable start-up received the overwhelming demand from institutional investors.
Uber has been told by banks that it could be a $120 billion company when it goes public.
Grab Gets Investments from Major Companies
Similarly, Grab, a Southeast Asian start-up, is said to achieve $11 billion in its latest funding round. It’s a significant jump from its $6 billion at the beginning of this year.
The company is expected to raise roughly $3 billion by the end of the year.
In fact, Toyota Motor Corp, Microsoft Corp, and other international investors have invested
SoftBank Group alone is close to pouring $500 million into Grab.
Ride-hailing industry expected to grow eightfold to $285 billion by 2030
Why are investors and automakers investing aggressively in these ride-hailing companies?
The consumers are moving from the concept of owning a vehicle to sharing one. This has led to the rise of ride-hailing services demand.
Hence, investors and carmakers are looking to capture this fast-growing market.
According to a Goldman Sachs report, the global ride-hailing market is expected to grow from $36 billion in 2017 to $285 billion by 2030.
The average number of ride-hailing trips a day globally are also expected to grow from 15 million in 2017 to 97 million by 2030.
As a result, the positive prospect of the ride-hailing industry is attracting renowned car makers and as new start-ups make forays into the market.
Here are some examples of new entrants in the market:
· Go-Jek, an Indonesian scooter-ride start-up is expanding in the Southeast Asian region; including Vietnam, Singapore, Thailand and the Philippines. Tencent Holdings Ltd and JD.com are existing investors of this start-up.
· Waymo, an Alphabet subsidiary developing self-driving vehicles and an autonomous ride-hailing service, has now logged 10 million miles on public roads in real-world traffic. This will be the first robotaxi service in the U.S.
· Alibaba-backed Hello Chuxing, formerly known as Hello Bike, has started piloting a taxi-hailing service in China, working with partners in Shanghai, Nanjing, and Chengdu.
· Daimler is said to work with Geely on a new ride-hailing service in China.
· Softbank and Toyota are teaming up to establish a Joint Venture to provide ride-sharing, mobile convenience store, workspace, food delivery and many services.
Ride-hailing Companies are Facing 3 Big Challenges
There is no denying the ride-hailing industry have exponential growth prospect.
But, the companies are facing 3 big challenges which will limit their future growth.
1. Rising Competition
Nowadays, more and more new entrants enter the ride-hailing industry. The economists and analysts see the ride-hailing industry as ripe for competition.
The merger of Grab and Uber has reduced competition in Southeast Asia. But Indonesian-based rival Go-Jek
Its regional expansion initiative will challenge Grab’s current stronghold in the region.
We also see new players trying to penetrate China
Alibaba-backed Hello Chuxing is not the only one trying to take a piece of China’s lucrative ride-hailing market.
Earlier this year, Chinese on-demand food delivery service operator Meituan Dianping started piloting ride-hailing service in Shanghai and Nanjing.
However, the company announced last month that it would suspend its expansion into the industry.
2. Safety Issues
Ride-hailing is big business in the world’s most populous country.
But safety concerns are mounting after a string of high-profile murders reported in the country.
Didi’s safety record came under intense scrutiny this year with news of sexual assault, rape and murder cases.
As a result, it in setback with online backlash from Chinese netizens.
The crimes have drawn ire from the government and triggered a #deleteDidi online campaign on Weibo, China’s local version of social media platform Twitter.
Similar scenarios of drivers sexually assaulting or robbing their passengers have been reported in Grab, Uber, and Lyft too.
3. Stricter Regulations
Regulation has been a hot topic in the ride-hailing industry.
The companies fighting tooth and nail with authorities around the world on the regulation.
For example, ride-sharing is banned in principle in Japan as it is an unlicensed taxi service.
The local governments aim to protect the local taxi industry.
In London and other UK cities, the rule changes are undergoing recommendation to the government.
Uber and similar services could be facing caps on the number of licenses for vehicles that can operate ride-hailing services.