Cab drivers go extra mile to toe the line, post Uber crisis

Three days ago, a few taxi drivers associated with Ola Cabs got a text message from the company. They were summoned to its office to get GPS (global positioning system) devices installed in their cars. The only jarring detail in the text message was the time. They were called between 2 am and 3 am. But, ungodly hour did not deter the drivers from reaching Ola’s office.

“The company wants to finish installing devices in all the cars in its network in 24 hours that is why it is doing it round the clock and we are all fine with it,” said Sunil  Sudan, one of the Ola drivers called at that time.

If companies like Ola are going all out to comply with the regulators and to rescue their business, so are the drivers.  

A lot is at stake. The government banned services of web based taxi companies including Uber, Ola Cabs, TaxiForSure after the alleged rape of a 27-year-old finance executive by an Uber driver last week.  The decision has not just hit the operations of these companies but has thousands of taxi drivers who had enrolled with these companies without any source of income. Their biggest worry is the monthly installments they have to pay for the cars they had bought after they aligned themselves with a new-age taxi company like Uber or Ola after being “assured” of business and fixed monthly revenues. In the case of Uber, the assured payment was of Rs 40,000 per car per month only if the driver promised to put in 10 hours each day every week for the company. “If someone could not  reach the Rs 40,000 by the end of the month – which was a rarity – the company would pay the difference,” said Sudan.

“This is what made all of us buy the cars,” added the father of two who purchased a Swift DZire for Rs 6.13 lakh and pays an installment of Rs 11,000 each month.  This was not the case earlier when most of the drivers were attached with traditional taxi companies which paid far less as monthly salaries to these people.

Business Standard spoke to three drivers for the story, two of them including Sunil had bought a car recently on loan. And a third one – Yashpal Sharma – said that he was planning to buy one in January.

“I was thinking to getting my own car since with Uber I could easily earn between Rs 20-25,000 compared to Rs 10-15,000 earlier,” says Sharma, who is continuing to work with a traditional  private taxi company who had leased cars to Uber.

The enticement was difficult to resist. Companies such as Uber made the drivers small entrepreneurs by enabling them to purchase their own vehicles while assuring them a fixed monthly sum.  According to a recent report, over 50,000 drivers across India are associated with taxi booking firms. Since a lot of them financed their cars in the through auto finance companies, about Rs 100 crore is estimated to be at stake in Delhi alone  with an average loan size of Rs 6 lakh. The exposure of auto finance companies to the Internet taxi segment is over Rs 500 crore.

Recently, Uber had partnered with lending companies like Shriram Finance, AU Financiers and Toyota Financial Services. These companies had offered cars to drivers on Uber’s network at down payments as low as Rs 60,000.

Exclusive discounts on cars of Mahindra, Maruti Suzuki, Tata Motors, and Toyota were also offered. While Taxi For Sure had partnered with Tata Nano, OlaCabs helped drivers procure cars at discounts of up to Rs 1 lakh.

“Shriram Transport Finance and Uber encourages ‘Drivers cum Owner’ business model and the drivers get easy financing. Since, Uber ensures enough business to these drivers so that their vehicles are fully utilized thus assuring us of our EMI payments," Umesh Revankar, MD & CEO, Shriram Transport Finance had said while inking the partnership with the company.

But soon after the news of the ban on web-based taxi service companies was out, most of the vehicle financing companies put a stop to existing arrangement as they await “clarity”.

That’s what the drivers seek too. Sunil, who claims to be clocking revenues of around Rs 60,000 per month saving anywhere between Rs 15,000 to Rs 20,000, has been whiling away time at home for the past week. He sits all day in front of the television, closely monitoring developments on the Uber case. “Dekhte hain aage kya hota hai, abhi toh khali baithe hain,” he says on the phone. (Let’s see what happens, for now I am sitting idle)

 

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