Uber launches Cheaper-Than-Auto UberGo

Uber technologies, the San Francisco based cab providing startup, now wants to cater to the masses in India, which is its fastest growing market outside the US!

It entered the Indian market with Uber Black which provided high end luxury vehicles, followed by the mid-range UberX with which it planned to take on its Indian rivals like Olacabs and Meru. With the aim to strengthen its presence in the lower-end taxi market, it has now announced UberGo service.

UberGo, the India-centric low cost cab service, is meant to take on auto rickshaws with its minimum fare being as low as Rs 80 in metros like Mumbai, Delhi and Chennai and Rs 30 in cities like Pune and Jaipur, etc. The base fare will be Rs 40 plus an additional Rs 11-12 per km and Rs 1 per minute.

The existing minimum fare for the UberX is Rs 150 in metros and Rs 90 in smaller cities. Though it is not yet clear how the new cheaper service will affect the existing services being offered by the company, Uber is pitching UberGo as the service for regular users of cab services as compared to UberX, which is meant to cater to larger group and families.

UberGo service, which is about 20% cheaper than the existing UberX, will be offered to users across ten cities for now. Hatchbacks like Tata Indica Vista, Nissan Micra, Maruti Swift and the Maruti Wagon R will be used for ferrying passengers travelling over smaller distances like a run to the mall, a short trip between meetings, rushing to the multiplex for a movie or a quick run to the bank, etc. The drivers of these vehicles will be given Huawei devices to enable them to connect to customers.

“We’re changing the use case for taxis as we want people to use them for shorter distances. The customer will pay the same fare as he does for an auto rickshaw and in some cases even less,” said Gagan Bhatia, GM for Uber in Delhi. “We’re entering the second phase of growth in India, which goes to show in our recent announcements,” said Bhatia.

Uber has already tied up with Paytm, digital payment provider, so that cab users can pay for their rides using debit cards and credit cards as well. Besides that, they have been trying to lure more cabbies into their fold by offering them new vehicles at better terms.

“We’re going to do what it takes to make Uber an uber-quality experience and to invest in a market (where) we’re convinced of the opportunity,” Allen Penn, head of Asia operations, had told ET last week. “And we see that opportunity in India as big as anywhere else in the world. You will continue to see us customize products for local markets.”

It is important here to note that Uber’s Indian counterparts, the two leading cab service providers- Meru and OlaCabs- have already introduced low cost alternatives for their cab users.

It is obvious that all leading cab services are involved in a neck-to-neck battle to capture the largest share of the Indian user market and they are willing to compromise on the margins for which they offer their services in return for capturing a larger user base.

Ola had recently raised $210 million from Japan’s SoftBank. Bengaluru based TaxiForSure, which already raised $30 million in August, is also talking of raising fresh capital to the tune of $60 million once again. Uber is also expected to pump in an additional $400 million in India.

With the taxi service market in India being valued by experts at $9 billion, that should come as no surprise.