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Ride-hailing apps were cruising towards recovery—but then came India’s second Covid-19 wave

The spread of the coronavirus disease (COVID-19) in New Delhi
Reuters/Danish Siddiqui
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  • Ananya Bhattacharya
By Ananya Bhattacharya

Tech reporter

Published Last updated

After nearly a year of Covid-triggered slump, ride-hailing companies in India had finally started recovering in early 2021. But the onset of the second wave of the pandemic could hit the breaks on recovery.

Companies like Ola and Uber were nearly completely out of business during April and May last year as India was under lockdown. Between June and December 2020, these apps saw “gradual recovery,” according to market research firm RedSeer Consulting. The recovery after the lockdowns was slow mainly because offices continued to remain shut and most people chose to stay indoors as a precaution against Covid-19.

By March this year, ride-hailing companies’ business had recovered to around 70% of the January 2020 levels, when Covid-19 had not hit India.

RedSeer

“However, with the recent Covid-19 developments in the country, the recovery is likely to go on a downward trajectory with a drop of 30-40% in the coming months as many states like Maharashtra, Delhi, and Karnataka among other states go into lockdown,” Redseer warned. In a May 5 earnings call, Uber CEO Dara Khosrowshahi acknowledged that the “extremely elevated case count and renewed lockdowns in India adversely impacted mobility trends there.”

Autos vs taxis in India’s ride-hailing sector

The business recovery in the autorickshaw segment has been much higher for ride-hailing firms in India.

One reason for this could be that a 2020 study had found that driving with windows down in a car could reduce the transmission of Covid-19. This could have led many commuters to perceive the autorickshaw as a safer option than cars.

By March this year, the car taxis had made a 60% recovery compared to pre-Covid levels, while autorickshaws bookings were 90% of the pre-pandemic levels.

RedSeer

Seeing the strong recovery in the segment, Rapido, an online bike taxi service, launched auto rides towards the end of 2020. “With the markets slowly opening up in the midst of the pandemic, auto drivers have witnessed a change in the behaviour of the customers as everyone is looking for limited interactions with others,” Rapido vice-president Shravya Reddy told Financial Express. Its platform clocked over a million auto rides within five months.

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