Home Social buzz Peak Uber

Peak Uber

16 min read
0
0
1,321

People often discuss “peak oil,” but I’d like to broach a far more controversial topic: Peak Uber. That’s right, your not so friendly neighborhood ride-sharing services not necessarily on an inexorable march toward world domination (even at a valuation of $62.5B).

Source: www.thorntech.com
Source: www.thorntech.com

Far too often, people are lulled to sleep by recent historical trends and it typically requires a vigorous jolt to remind a person that past performance is no guarantee for future success.  At the very least, it’s certainly not a foregone conclusion.  As a sagacious observer once observed, the Stone Age didn’t end for lack of stones: it was a better, more practical mousetrap.  The arguments made below pay homage to this theme in the context of Uber’s recent rise to dominance.

Source: www.livemint.com
Source: www.livemint.com

Please note that I’m not advocating that Uber (or similar ride-sharing services) will stop growing tomorrow, but I am making the case that the business may crest much sooner than people think for reasons that are not yet even into the public consciousness.  As we know with technology and societal change, preferences and momentum change very quickly and the difference between “uber” popularity and irrelevance is not nearly as pronounced as most people think.

For Uber, there are three macro trends that should be concerning for them between now and 2020.  Considering my bias toward the Indian market, I’ll focus most of my attention there (although the argument is still applicable to various degrees in other parts of the globe).

Development of Robust Metro Systems

It’s not a secret that a vibrant metro system can really bolster any city’s overall transportation ecosystem.   Metro networks are inherently cheap and taxis are never in a position to compete on price, even with a pooling/sharing option.  Moreover, metros typically save the end user considerable time when traveling through densely populated areas that are ripe with congestion (particularly true during rush hour times where a trip on a metro can be 3-4x faster).  With the advent of apps that indicate train timings, it will become even easier for an individual to optimize his time while taking the metro (taking a page from Uber’s playbook with added efficiency!).

Source: ourdelhidiary.blogspot.com
Source: ourdelhidiary.blogspot.com

Until very recently, India didn’t have anything remotely resembling the robust metro systems that could be found in Europe, the US, or even China.  All this is changing rapidly however as Delhi, Mumbai, Bangalore, Hyderabad, and Chennai is presently laying >500 km of metro lines between them!  This is simply staggering to think about given the current under-penetration levels of metros today.  All this means that it’s going to be considerably more convenient to commute to work using the metro in the next 2-3 years (when most of the metro buildups are expected).  It’s critical to note that a metro system’s usage tends to be demographically agnostic and it’s expected that India will see both low-income individuals and high-income professionals standing side by side on the trains.   This most certainly means that Uber will lose at least some of its bread and butter weekday commuter customers due to this cheaper, faster option.

Source: news.indiaonline.in
Source: news.indiaonline.in

As the metro continues to get built out, more and more neighborhoods will get connected, thereby making it even more convenient for weekend usage as well.  There will now be very viable alternatives to that Saturday afternoon Uber trip to the mall and back.  As a result, it’s not a stretch to see the weekend Uber use case largely relegated to the socialites that party into the wee hours of the morning (and who will routinely miss the Metro’s last call).   Even if metros run slightly less frequently on the weekend, it’s well-known psychology that individuals tend to be less obsessive over saving time on the weekends since they’re inherently more in leisure mode.  This mentality also plays right into the hands of the metros over Uber.

A final point to note on the metro is that cities are now designing convenient extensions to the airport.  This means that it will very soon even be more time efficient to take a train as opposed to an on-demand cab.  While this won’t eliminate the need for Uber as a high-powered exec flying in for the day, data from other countries shows that it will certainly dissuade some middle tiered business travelers from using a taxi since there’s huge cost saving potential.

Dispersion of Commercial Zones Across Cities

Urban planners have long called for the acceleration in the development of vibrant, mixed-use communities that allow for individuals to live and work in an area that’s within a tightly defined radius.  Given the haphazard planning of most Indian cities, traffic patterns end up being chaotic and oftentimes quite random.  As such, it quite frequently becomes perilous to even travel 5-6 km by road.  With this in mind, companies are now routinely taking up office spaces in traditionally residential neighborhoods (e.g. Indira Nagar in Bangalore, Andheri West in Mumbai, etc.).  This is done to largely facilitate a more convenient lifestyle for the company’s employees.  As this trend becomes more and more pronounced, it’s quite clear that individuals can use more sustainable, environment-friendly ways to reach the office.  Walking and cycling are bound to pick up when someone lives just 1-2 km away from his office. Most Indian cities are now starting to dedicate budgets to building cycle friendly corridors for this very purpose.  While efforts here are still quite under-developed, the trend is intensifying and slated to increase further in the years to come.

This inclusive approach to urban planning is bound to eat into Uber usage since people will have everything that they need all in a short navigable radius from their home.  More self-contained neighborhoods are surely the wave of the future given the inherent madness on the roadways.

Self-Drive + Curated Parking

For the record, I’m not referring to autonomous (self-driving cars), but the more traditional vernacular of a car where you drive yourself instead of taking a vehicle with a driver (like an Uber cab).  In India, the self-drive rental market is still in its infancy with a total fleet size just north of 3,000 vehicles.  To say this is underpenetrated is making an epic understatement; just look out to China to see a vibrant market of 200,000 + self-drive cars plying across more than 150 cities.  Some might say that China is less chaotic and more structured than India, with better road conditions and easier parking.  For those with this viewpoint, I urge you to spend a week in Beijing and see if this view sticks.  While the Chinese roads may be of higher overall quality, the staggering density and jarring traffic hit you at nearly every turn.  Where China does clearly have India beat is with respect to a more organized parking sector.  It is in the parking space where India will see the most innovation in the next 2-3 years.

Zoomcar fleet

With the advent of parking aggregators and the broader digitization of parking, it will soon be possible to dynamically book parking spaces across the city on your smartphone.  This can be done either ahead of time in a reservation format or more on-demand when you’re out and about.  In both cases, the convenience offered will be unparalleled since this service will be like any hyper-local service: the more usage, the better and more intelligent the system becomes.  Over time, parking will become an afterthought for individuals because it will be as simple as ……”booking an Uber today!”

With tariffs that are 30-40% lower than Uber for the same equivalent trip, it’s easy to see why self-drive + carefree parking will be a stellar one-two punch against the on-demand taxi market.  While this will undoubtedly not supplant all the Uber use cases since many people will simply want to be driven, this will open up a new, still unexplored option for millions of individuals.  Till date, Uber really hasn’t seen any competition for the seamless, short duration intra-city trip.  As technology infects the parking industry and as self-drive continues to scale, this will no doubt change.

As mentioned earlier, these types of product improvements typically occur much quicker than one might otherwise expect.  For the Indian market at least, the cost sensitive consumer will always be king.  When considering value for money, it will be hard to beat the self-drive option considering Uber will always have a driver (hence additional cost) for the foreseeable future.

In conclusion, the rapid expansion of metro networks, the movement toward local mixed-use development, and the rise of self-drive rentals with curated parking has the potential to dramatically eat into Uber’s future business by 2020.  Lower cost, more convenience, and more intelligent urban planning certainly pose more than just existential threats and it’s important that people take notice when thinking about India’s future urban transportation landscape.

Liked the Article ? Share it with your Friends

Load More Related Articles
Load More By Zoomcar Admin
Load More In Social buzz

Leave a Reply

Your email address will not be published. Required fields are marked *

Check Also

Best of Ganesh Temples from Kanyakumari to Kashmir!

The Lord of Beginnings and the Remover of Obstacles- Vigneshwara, the God of prosperity, w…