Private-hire app is like the best invention after air-conditioners—not only does it bring convenience to us commuters, it also makes transportation a tad more affordable (at least in private transportation).
In Singapore, the competition between Uber & Grab is what makes the price and service attractive: while there isn’t much difference between these two key players, the prices between them and traditional taxi can be large on certain periods.
Now, we can’t deny that it’s this competition that keeps the prices, and services, in check: but this latest report, if true, could just change everything.
CNBC just reported that there is a possibility that Uber could be selling its Southeast Asia unit to its rival Grab: and that includes the Singapore (and Malaysia) market.
According to the report, which is based on unnamed sources familiar with the matter, the US-based Uber is preparing to sell the business “in exchange for a sizable stake in the company.”
The deal isn’t finalized nor confirmed, and the timing isn’t certain as well.
Both Uber and Grab declined to comment, but both have not said that these were rumours.
Late last year, Uber sold 51% of its car rental company, Lion City Rental, to ComfortDelGro and struck an unexpected alliance with the taxi giant. That cost ComfortDeloGro SGD$295 million.
Just a few months before the announcement of that deal, Grab secured debt facilities of well over SGD$900 million for their rental fleet.
In other words, Grab borrowed money to up their car rental fleet game while Uber sold their car rental fleet.
Following that, on 19 January 2018, UberFlash was born, in which riders can book ComfortDelGro taxis like they were private-hire vehicles.
Earlier last year, Grab did the same thing with other taxi firms (albeit smaller ones).
Simply put, taxi companies have subscribed to the age-old advice: if you can’t beat them, join them. And they’ve all joined them.
That leaves the two private-hire firms in a one-on-one fight.
But of course, this new arrangement, should it materialize, would change the game altogether.
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Both companies are losing money in this long battle: Uber lost USD$4.5 billion in 2017 alone while Grab, which is more secretive about their numbers, reportedly lost $35 million per month in the third quarter of 2015.
Like most tech companies, they survive on investors’ funds while gaining market share (and disrupting industries like a boss, indeed).
According to the CNBC report, the sale of the Southeast Asia Uber business is to prepare for an IPO. Well, kind of make senses, because it’ll be tough to explain to thousands of shareholders on why they lose so much money every month.
Now, if this deal goes through, it means there’s only one player in the market: Grab.
That’s a monopoly that would have repercussions beyond our imagination; and of course, the only solution is to stop taking private-hire / taxis altogether, but with many of us being accustomed to this transportation mode, it’ll be hard to change the status quo.
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In fact, I’ve friends who take private-hire whenever they go; it’s like they own a car and a driver.
In the US, there’s not just Uber that’s monopolizing the market: Lyft, that works like Uber, is its main competitor and is surprisingly projecting a profit this year (2018).
I guess it’s just a matter of time: we might be going back to days when we won’t be saying things like “Oh, let’s just Uber there” anymore.
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This article was first published on goodyfeed.com
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Featured Image: vincenzo_mancuso / Shutterstock.com & TY Lim / Shutterstock.com
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