Reports from India suggest the burgeoning shared mobility services sector is emerging as a big loser in the current COVID-19 crisis and is also denting its prospects further out.
GlobalData analyst Animesh Kumar says the pandemic is leaving a deep mark on the mobility sector in India. He notes that daily ridership has decreased significantly and consumers are taking precautionary measures. “Most players have suspended operations amid the nationwide lockdown,” he says. “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.”
Prior to the coronanvirus pandemic, shared mobility services including ride-hailing, car/scooter sharing and ride sharing witnessed rapid growth in India and were 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,” says Kumar. “However, Covid-19 and the resultant nationwide lockdown have severely impacted the shared mobility sector and also sectors like auto leasing and car rental.”
He maintains that unless 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 organisation. Ola backed scooter rental company Vogo laid off over 40 employees in March 2020.
Furthermore, he says the impact is likely to be witnessed beyond the current crisis. “Uncertainty over recovery poses an existential threat to many shared mobility service providers,” he maintains.
“COVID-19 is expected to change consumer travel preferences in the near-term. The outbreak is also 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.”