San Francisco: Ride-hailing company Uber is clocking more than 10 million rides every week in India, more than twice as many from a year ago, as the company prepares to boost its investment pace in its most important international market.
Since entering India in August 2013, US-based Uber has quickly expanded to become one of the top two ride-hailing service providers, along with local rival Ola (ANI Technologies Pvt. Ltd).
India is now the its most important market outside the US after it sold its businesses in China and South-east Asia to local start-ups Didi Chuxing and Grab, respectively.
“We have a clear position of strength in India. After the Grab deal, we are increasing levels of resources that we can invest in opportunity markets and India is right on top of that list,” Uber chief operating officer Barney Harford said in an interview at its headquarters in San Francisco.
While India is considered to be a lucrative long-term market, the current market size is small. India’s cab-hailing market in terms of gross booking value was about $2.1 billion in 2017, according to RedSeer Consulting. That is far smaller than Uber’s business in just San Francisco. And given the relatively small size of the market, it requires companies to book huge losses. For instance, Ola reported an operating loss of Rs 3,731 crore on revenue of Rs 1,178 crore for the year ended March 2017, according to official documents. (Uber’s numbers are unavailable.)
Yet, Harford said that Uber will continue to invest heavily in India to grow its business rather than focus on cutting losses. Apart from its core cab business, Uber also runs its food delivery service Uber Eats in 16 Indian cities.
“We have an indefinite investment horizon in India. The market opportunity is so significant that we’re not focused right now on how can we get this business to profitability,” he said.
Harford added that even after a public listing of Uber— expected within the next two years—it will not stop the firm from continuing its aggressive investment pace in India and chasing growth over profits.
“If you overlay the GDP growth potential in India (with the transportation market potential) it absolutely makes sense for this to be one of the markets we’re investing in over the long term. The logic imperative to invest in India over the long term is very clear. We’re confident that we’ll be able to articulate that and the investors who choose to invest in Uber will be investing with that understanding,” he said.
Mihir Dalal was in San Francisco at the invitation of Uber Technologies Inc.