Business

Your next Uber may be a bus

People are pondering before opening that ride-sharing app on their smartphones.

The practice goes nowhere, but the slow pace of occupancy recovery from the depth of the pandemic is the latest sign that the industry may not be as widespread as once expected. As the dream of world domination diminishes and investors monitor earnings, the cost of the vehicle can drive some potential customers to more economical forms of transportation.

Recently a market leader

Uber

UBER 0.47%

Technologies has moved beyond services that use that name as a verb. According to the 2022 Investor Day Deck, Uber is located in 72 countries. We added Eats to deliver food and extended it to add convenience, alcohol, diapers and more. Currently, taxi partnerships and travel are being added. Soon you will be able to call your own private party bus.

These additions are pitched outwards as follows: How Uber actively builds superappli From the position of strength. They are definitely just as defensive. Where investors once wanted quantity, they are now looking for quality. CEO Dara Khosrowshahi recently wrote in an internal email: Show them the money.. “

The economics of ride hailing have changed. Uber and

Lyft

LYFT -1.14%

Over the years, it has grown by subsidizing the cost of vehicles to gain market share from other means of transportation and from each other. Between 2016 and 2021, Uber burned an average of nearly $ 3 billion annually.

But broad subsidies are no longer a winning strategy, as investors are now focused on putting cash in their pockets rather than splashing them. And that discipline comes at the time of rising costs. Labor law, competition, and soaring vehicle and pump prices mean you have to pay more to ride-sharing drivers. The combination of these costs and the demands on investor profits and cash flow means that post-pandemic ride hailing will never be as affordable as it used to be.

Nationally, average ride hailing prices for April Was already up YipitData shows close to 39% from the same period in 2019. Some of them have to do with longer vehicles that consumers are currently taking. But even per mile, prices have risen by more than 27%. In the vast Phoenix and Atlanta, Uber and Lyft combined rates per mile increased by an average of about 40% and 50%, respectively.

Share your thoughts

How did the rise in rideshare prices affect how you use Uber and Lyft? Join the conversation below.

Pandemics may be declining and spurring more tourists and commuting demand, but consumers may consider cheaper options as prices and prices for other goods and services rise. there is. And pricing can be even richer. Faced with a shortage of drivers, Lyft may need to compensate for higher rider rates to compete. On the other hand, if Uber continues to drive aggressive growth in food delivery and other non-core businesses, someone needs to carry that tab.

Ridehaler sought to free us from car ownership and provide us with more convenience and comfort than any other means of transportation available. What if the future of ride sharing is … a bus?

Write to Laura Forman laura.forman@wsj.com

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Your next Uber may be a bus

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