Uber will continue to burn capital in India: Dara Khosrowshahi

Dara Khosrowshahi, CEO, Uber
US ride hailing giant Uber will continue to burn capital in India as it looks to edge out homegrown rival Ola, CEO Dara Khosrowshahi said in an interview with a news channel. Khosrowshahi also dismissed the speculation that a merger between the two ride-hailing firms was on the charts.

Uber says it will leverage the profits it makes from developed markets in the US and Europe to fund the losses of its Indian business. This had been one of the key contentions for Ola to seek protection from the Indian government against the onslaught from Uber back in 2016, arguing that it wasn’t fair.

“I think we’re going to be quite aggressive in India as far as investment goes. One of the great structural advantages that we have at Uber is that we have many profit pools. Those profit pools in the mature markets in the US and Europe, allow us to actually lean into some of the developing markets,” said Khosrowshahi, in an interview with ET Now on Thursday.

Both Uber and Ola have burned billions of dollars over the past four years in subsidising rides for customers and paying incentives to drivers. Uber has leveraged its global cash machine advantage and massive funding it has raised, Ola had to rely solely on the equity capital it has raised from investors such as Softbank and Tiger Global.

Given that Softbank is now a common investor in both firms, speculation has been ripe that Uber will sell its India unit to Ola in return for a hefty stake in the Indian company. However, Khosrowshahi in the interview dismissed the claims, adding that while it was fun to speculate no such deal was on the charts.

“My focus is on our quality of operations and our teams, that’s why I’m here. I’m here to meet with our teams, ministers, etc, to understand the market, and at this point I’m not really focused on M&A, although it’s certainly fun to speculate about,” added Khosrowshahi, who took over as CEO of Uber from founder Travis Kalanick in August last year.

While Ola is considered to be in the lead in India, a top executive at the Indian firm who did not want to be named, admitted that Uber and Ola were neck and neck in the cab hailing space. Ola’s advantage largely comes from the autorickshaw category in which Uber has only recently entered, and is also one of the reasons Ola is investing so heavily in it.

He added that Ola loses about Rs 70 per auto ride currently, but that’s far lower than what the company loses for every cab ride.

Globally, Khosrowshahi has already made it clear that Uber wants to be a transportation company and not just an app that allows customers to hail cabs. “I want to run the bus systems for a city,” he was quoted saying by the Financial Times at an event earlier this month. “I want you to be able to take an Uber and get into the subway... get out and have an Uber waiting for you.”

Those ideas are on similar lines to what Bhavish Aggarwal, co-founder and CEO of Ola has. Ola has already experimented with running a fleet of buses in some Indian cities and has also diversified its offering to include autorickshaws, motorcycles and even bicycles. Uber recently got back into the auto hailing space and it is to be seen if it tries its hand at other modes of transport as well in India.

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