Following the news that Singapore-based Grab reported US$1bn loss in Q4 2021 on heavy incentive spending;

Bakar Sadik Agwan, Senior Automotive Consulting Analyst at GlobalData, a leading data and analytics company, offers his view:

“Southeast Asia’s shared mobility giant Grab, which has been transforming into a SuperApp, has observed revenue loss owing to massive spending on incentives for consumers, drivers and merchants. It indicates that shared mobility companies of the Asia-Pacific (APAC) region are battling with business ailments and consequent challenges.

“Many shared mobility startups in the region have succumbed to the disruption caused by the COVID-19 pandemic. Drop in shared mobility requirements due to hygiene issues and the prevalent work-from-home culture across the region brought app-based ride-hailing services utilization to all time low. Despite all the odds, Grab had managed to stay afloat given that it equally emphasized businesses that were more resilient to market volatility such as delivery and financial services.

“Grab’s gross merchandise value i.e., the total transaction value for ride-hailing dropped by 11% in Q4 while there was an increase by 52% for the delivery segment during the same period. As per Grab, the decline in revenue is attributed to massive spending on incentives for consumers, drivers and merchants which is a concern from an industry perspective and forcing the mobility companies to go back to ‘square zero’ situation. And now, the question pops up -will they be reliant again on massive incentives to boost their consumer base and combat competition?

“The mobility and tech market remains highly dynamic in Asia or other parts of the world, the squeezed margins for shared mobility players had led to negative market sentiments since COVID-19. Grab shares prices crashed 37% in the US signifying the big fall in the market. However, despite the challenges that Grab may face in the mobility business, it remains in a strong position as it is strengthening presence in profitable businesses such as delivery and financial services. The firm is all set to start a digital banking business in Singapore.”