03 Apr 2020
Posted in Automotive
Covid-19 poses an existential threat to many shared mobility service providers in India, says GlobalData
Following the news that coronavirus (Covid-19) hit Indian shared mobility service providers are turning to layoffs and salary cuts to keep business afloat;
Animesh Kumar, Director of Automotive Consulting at GlobalData, a leading research and consulting company, offers his view:
“The ongoing Covid-19 pandemic is leaving a deep mark on the mobility sector in India. Daily ridership has decreased significantly in the past months as consumers are taking precautionary measures and most players have suspended operations amid the nationwide lockdown. Ride-hailing giants Ola and Uber were among the first to announce suspension of services to general customers, followed by car sharing companies such as Zoomcar, Drivezy and Revv, and scooter sharing start-ups Vogo and Bounce.
“Before Covid-19 pandemic, shared mobility services including ride-hailing, car/scooter sharing and ride sharing witnessed rapid growth in India and were the major disruptors in the mobility sector. The growth of such services were considered as one of the reasons behind the declining sales of personal vehicles. However, Covid-19 and the resultant nationwide lockdown have severely impacted the shared mobility sector and also sectors like auto leasing and car rental.
“Unless the services resume soon, several service providers will have to resort to cost-cutting measures like layoffs and salary cuts. Bike-sharing and rental company Bounce has reportedly laid off around 120 employees, mostly mid to senior-level and also announced salary cuts across the organization. Ola backed scooter rental company Vogo laid off over 40 employees in March 2020.
“The impact is likely to be witnessed beyond Covid-19. Uncertainty over recovery poses an existential threat to many shared mobility service providers as Covid-19 is expected to change consumer travel preferences in the near-term. The outbreak is likely to impact the trust on public transportation as well as shared mobility and customers are likely to find personal vehicles safer. Moreover, most shared mobility providers and their partners have to tackle lease and loans. Without operations, there is a significant risk of loan defaults.”