Uber and Suzuki Motor are partnering to make ride-hailing services in Africa faster and cheaper.
The two companies signed a deal on Thursday (Nov. 1) to expand across sub-Saharan Africa the Suzuki Alto model used for the quick-trip, low-cost Uber ChapChap service. The fuel-efficient option was first introduced earlier this year in Kenya’s capital Nairobi, with over 500 vehicles serving the city now. With a base fare of 80 shillings ($0.80), the service allows passengers to take short trips within the central business district and its environs.
Uber said the plan to expand the ChapChap (meaning “faster” in Swahili) service was to create more jobs, give riders more choices, and reduce operational expenses for drivers. That has become especially crucial as riders, drivers, and e-hailing companies face fluctuating fuel prices, increasing taxation, and difficult economic environments.
The announcement shows how Uber is learning to innovate new driver partnerships in developing markets. The deal gives drivers who don’t own their own vehicle or drive someone else’s, and who may not qualify for traditional credit, the chance to not only start their business but also own their own vehicle. Drivers are usually considered for credit based on ratings and earnings record with Uber. Unlike in the US or Europe, many drivers in sub Saharan Africa cities tend to drive on the behalf of the vehicle owners.
For instance, when Uber ChapChap launched in Nairobi, the company partnered with banks like Stanbic to facilitate loans that guarantee full financing over a three-year period. The first drivers who qualified for the credit facility were those with ratings above 4.6 (out of 5) and those who have made Sh300,000 ($3,000) within the last previous three months.
But the move also shows how the San Francisco-based company is diversifying its Africa options as it faces stiff competition from other e-hailing services like Estonian ride-sharing platform, Taxify. The contest is also not just over customers: companies are also competing to attract more drivers by lowering commission fees.
Riders are also being given more control over their choices: Mondo Ride, for instance, allows companies to hail rides for their employees or for customers to go on long-distance travels to other cities after setting up a price. Over the last year, Uber has also introduced Uber Boda (motorcycle) in Uganda and Uber Poa (rickshaw) in Tanzania. In August, Uber’s general manager for sub-Saharan Africa Alon Lits told Quartz that tapping into locally-popular forms of motorized transport was a key component of their expansion strategy.
The deal with Uber also suits Suzuki’s ambitions, as it changes gears to expand across Africa. In September, the Japanese carmaker announced it would stop producing vehicles in China and focus its resources on the Indian and African market. Suzuki also pulled out of the US market in 2012 following low sales, high production costs, and the preference for larger models in the US instead of its compact mini cars.