Uber won’t stop pumping money into ‘healthy market’ India: Khosrowshahi
22 Feb 2018
US-headquartered ride hailing giant Uber will continue to spend capital in India as it looks to edge out homegrown rival Ola, chief executive Dara Khosrowshahi said in an interview with news channel ET Now.
Khosrowshahi also dismissed talk that a merger between Uber and Ola was on the charts, saying it was ''fun to speculate about'' but was too early to call.
On his maiden visit to India for the ET Global Business Summit 2018, Khosrowshahi said, ''India is a key component of our growth plan. In fact, it is one of our healthiest markets in terms of growth rates. We have over 3,00,000 active drivers and we currently do over 10 million weekly trips.
''When I think about Uber and where we are going to be 5-10 years from now, our success in India is going to play a vital part.''
He said Uber will use the profits it makes from mature markets like the US and Europe to ''lean into'' developing markets like India. This funding of Indian operations from other markets had been one of the key contentions for Ola in seeking protection from the Indian government against the onslaught of Uber back in 2016, when Ola argued it wasn't fair.
Both Uber and Ola have burned billions of dollars over the past four years in subsidising rides for customers and paying incentives to drivers. Uber has leveraged its global cash machine advantage and massive funding it has raised, while Ola has had to rely solely on the equity capital it has raised from investors such as Softbank and Tiger Global.
Given that Softbank is now a common investor in both firms, speculation has been ripe that Uber will sell its India unit to Ola for a hefty stake in the Indian company. However, Khosrowshahi in the interview dismissed the claims.
''My focus is on our quality of operations and our teams, that's why I'm here. I'm here to meet with our teams, ministers, etc, to understand the market, and at this point I'm not really focused on M&A,'' he said.
Khosrowshahi took over as CEO of Uber from founder Travis Kalanick in August last year.
While Ola is considered to be in the lead in India, according to Business Standard a top executive at Ola who did not want to be named admitted that Uber and Ola were neck and neck in the cab hailing space.
Ola's advantage largely comes from the autorickshaw category in which Uber has only recently entered, and is also one of the reasons Ola is investing so heavily in it.
The executive added that Ola loses about Rs70 per auto ride currently, but that's far lower than what the company loses for every cab ride.
Globally, Khosrowshahi has already made it clear that Uber wants to be a full transportation company and not just a cab-hailing one. ''I want to run the bus systems for a city,'' he was quoted saying by the Financial Times at an event earlier this month. ''I want you to be able to take an Uber and get into the subway ... get out and have an Uber waiting for you,'' he said.
''One the great things about Travis (Kalanick) is that he was always a lean-forward kind of a founder, and we want to have that lean-forward aggressive investment philosophy continue for the company. To that end, we are going to invest geographically and India is one of the key geographies we are looking at,'' Khosrowshahi said.