Uber may be reeling from bad press in the United States, its biggest market, but this morning it made the front pages of newspapers in India, one of its fastest-growing markets outside the US, for a different reason.
In a country that already enjoys some of the lowest transportation costs in the world—the minimum fare for a taxi in Mumbai is 21 rupees, or 34 US cents—Uber just cut its rates even further. The company’s new India-only discount service, called UberGo, offers hatchbacks at a base rate of 40 rupees ($0.65) and 12 rupees for every kilometer. The minimum fare is 80 rupees ($1.29).
Uber claims its pricing makes its cabs cheaper than Mumbai’s black-and-yellow street taxis. (Quartz has been unable to confirm this; UberGo cabs have been unavailable in Mumbai all three times we checked since the service went live this morning.) In smaller cities the base fare is 30 rupees, cheap enough to compete with autorickshaws.
UberGo is a response to Ola Mini, a cut-rate service from India’s Ola, the incumbent taxi app. Ola Mini itself was a response to UberX, the American company’s cheaper service for global markets (which is also available in India). In essence, Uber is using its vast war chest to destroy its rival in India—while also taking on autorickshaws and taxis—the same way it is attempting to do so in the United States. Ola recently raised $210 million in funding from Japan’s Softbank, and is valued at some $1 billion.
Demand for transportation uniformly outstrips supply in Indian cities, and UberGo will be welcome news to some Indians, who are accustomed to waiting at the curb, being routinely turned away—or gouged—by drivers, and often have to haggle to get anywhere for a decent price.
But for the country’s millions of taxi and autorickshaw drivers, who are already facing rising diesel and gas prices, Uber’s latest roll out is just going to make life more difficult.