Lower driver incentives lead to shortage in Ola, Uber car supply

Cab aggregators Ola and Uber are suffering from almost 25 percent drop in the number of cars since the previous quarter courtesy decline in incentives provided to the drivers, according to a RedSeer Management Consultants report.

Both Ola and Uber had showered the drivers with monetary incentives over and above the fares to build a large supply of cars and earn their loyalty. However, currently, the companies have been cutting down on such spends after scaling up the businesses, as they aim for profitability.

Ola and Uber drivers from Bangalore and Delhi had taken to the streets in February and March to protest against the decline of incentives. They were also unhappy with the inhuman working hours.

Although the strikes were called off, they brought out the issues in the existing framework of the companies. Incentives are the main reason drivers enlist themselves in these companies.

"The future of our business depends on making driving with Uber the most attractive choice. Given the strong demand from riders, drivers across cities continue to join the platform to get entrepreneurial work at the tap of the app and we are committed to supporting them. We currently have 240,000 active driver partners (who would have taken at least one ride in a week) and are seeing new sign-ups every day. We are not seeing any significant churn,” an Uber spokesperson said in an email response to ET.

Uber is also lobbying the government to ease regulations to allow the firm to introduce ride sharing using private cars in India, where any person who owns a car can sign up on Uber and ferry customers around either on a part-time or a full-time basis.