Jeffrey Funk and Adam Acar wrote an article for Nikkei Asia titled Ride-hailing insanity shows Japan is right to shun startups.

« Investors are starting to notice that losses show no sign of easing »

« Every ride-hailing startup has incurred huge losses since its inception.  »

« In terms of cumulative losses, America’s Uber and Lyft had $24.5 billion and $8 billion respectively at the end of the third quarter of 2021, while Singapore’s Grab had $13 billion and China’s Didi had $21 billion. India’s Ola had $6.9 billion in losses for a three-year period from April 2018 to March 2021. Ride-hailing has also increased congestion, according to the most reliable data in the U.S.  »

« Yet taxi companies have profits, though the best data is for publicly traded companies. Japan’s Hokko Daiwa Taxi had profits of 506 million yen and 360 million yen in fiscal 2018 and 2019, respectively. In Singapore, its largest taxi company ComfortDelGro had profits of $89 million in the first three quarters of 2021 versus losses of $1.4 billion for local ride-hailing champion Grab. »

« Why? Simply put, it is easier for taxi companies to pick up passengers than ride-hailing services. Passengers can hail a taxi on the street or queue at a taxi stand, while ride-hailers must rely on passengers booking through an app. »

« This means that taxi drivers will spend more time driving around with paying passengers than ride-hailers, which will, in turn, impact how much money there is to divide between drivers and their companies. The only way for ride-hailing companies to turn a profit will be to reduce driver income. »

« As for congestion, as it takes fewer taxis to move passengers around cities than ride-hailing cars, a single taxi has less impact on congestion than does a single ride-hailing vehicle.  »

« Our analysis of 133 publicly traded unicorns in the U.S. found that 89 had cumulative losses greater than their annual revenues; these are losses that have been accumulated since their founding.»

« Consider for a moment the plight of those startups with cumulative losses greater than 2020 revenues. Even if they were to magically achieve profits equal to 10% of revenue, a truly difficult feat, it would take 10 years to erase the cumulative losses. Few have done this in the past. »

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s