Published on: 09-Feb-2017
Nine out of 10 Uber cars in Singapore are being used at any one time, contrary to reports which said a significant part of Uber Singapore's fleet is idling in carparks.
In an interview with The Business Times yesterday, Uber Singapore general manager Warren Tseng said the cars that have been "deemed idling in carpark lots" are either new cars being inspected, having the In-Vehicle Unit (IU) installed or cars that have just been returned and are being cleaned.
Mr Tseng was rebutting news reports that said close to 1,000 brand new cars, many with the Uber-owned Lion City Rental (LCR) number plates, had been sitting in a number of multi-storey carparks in Singapore.
"There are lots of cars around the city that could be easily mistaken as Uber cars. It's also impossible that our cars are idling islandwide, when we have only three pick-up points for our drivers," Mr Tseng said.
He also said that LCR "exists in response to market demand".
"There are tens of thousands of drivers in Singapore today, who recognise the opportunity to earn money flexibly. We wanted to encourage drivers to try our platform by making our rental flexible - something that the taxi companies are currently adopting," he said.
"With such flexibility, you see cars coming in and out daily. Sometimes they are parked for servicing; other times for cleaning after the driver is done using the vehicle. As an outsider, if you look at the lots, it is easy to assume they are not be hired," the head of the ride-hailing service provider said. But he declined to disclose the total number of vehicles in its fleet "for strategic reasons".
Mr Tseng, who moved to Singapore in 2014 after launching Uber in Thailand and Indonesia, said he wanted "to experiment owning assets" as the company grows organically here - moving away from its original "asset-light" model.
"With assets, we have a very different business model here. We are learning the workings of a car rental company and at the same time, how to grow an asset business at the speed of an app service," he said, debunking the rumour that Uber is selling off what were deemed as its idle vehicles.
Instead, the company continues to bid for Certificates of Entitlement (COE) to build its assets and the move was confirmed by car dealers and parallel importers.
Owner of second-hand car dealership Carnex Auto Ong Yuan Sheng said Uber is "still bidding" for COEs and several parallel importers, like Mr Steven Tan from ST Carz, said the private-hire player is buying cars from them.
Sia Siew Kien, Associate Professor of Information Technology & Operations Management from the Nanyang Business School at NTU, said startup funders and investors tend to be demanding and the funds raised by these startups "are typically tied to some growth or expansion plans".
"To establish its market presence, Uber not only needs to fight the incumbents but also other equally strong startup competitors such as Grab. Uber's intensely competitive behaviour is thus understandable. As a platform player, scalability is important. You can only be number one in the market. There is no place for the smaller players," he said.
"In a way, Singapore is unique as cars are generally more expensive than other countries. Consequently, the pool of private drivers willing to go with Uber and Grab is smaller. This is one way Uber and Grab can expand their driver pool to ensure ready ride availability for customers," Prof Sia added.
Uber, a global powerhouse valued at close to US$68 billion (S$95.9 billion), is focusing on organic growth as it expands into South-east Asian markets, its senior vice-president of policy and strategy David Plouffe revealed in an interview during a visit to Taipei in November last year.
And while some industry watchers felt that Uber is creating pressure on COE prices last April and May when it reportedly secured about 1,700 car COEs within just two months of bidding, Mr Tseng said "it is unfair and misdirected to assume so".
"If you look at LTA's (Land Transport Authority) data, COE prices have actually dropped from April 2015, which was a month after LCR started, to the current rates," he said.
Mr Tseng said the company's ultimate strategy: To optimise the use of every single car.
"Consider how many cars you see on the road with just one person in it. We think it's a waste as it leaves up to four other seats unused. With ridesharing and carpooling, seat utilisation per car is increased and we are getting 120 per cent out of these cars, compared to what the individual car owner is getting," he said, adding that one in three Uber rides in Singapore is an uberPOOL ride.
Co-founder of influencer marketing and media company Gushcloud Althea Lim said Uber sees itself as a car-asset company in South-east Asia and by growing its assets, it will be able to control pricing and push rivals out of the market.
Rival Grab has also upped its battle against Uber in the region. The Singapore-based company, valued at more than US$3 billion (S$4.2 billion), announced its plan to put US$700 million (S$989.2 million) to work in Indonesia, the largest of the six markets in serves in South-east Asia, over the next four years.
Its spokesman said: "Grab wants to build a multi-modal shared transportation platform made up of the widest land fleet network of taxis, private-hire cars, and personal cars. We truly believe that a multi-modal approach is the only way to reach our goal of ensuring every Grab ride arrives in less than three minutes."
Source: The Business Times, 9 February 2017
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