Grab guns for lion’s share of carpooling market with new service GrabShare

Grab guns for lion’s share of carpooling market with new service GrabShare

The company says it is launching the service now as its other carpooling platform - GrabHitch - has grown about 75 per cent in the past three months alone.

GrabShare launch

SINGAPORE: Months after rival Uber began its on-demand carpool service UberPOOL, ride-hailing app Grab has upped the ante with the launch of a similar service in Singapore - GrabShare. This comes amid the growing popularity of ride-hailing and carpooling apps, with more commuters in Singapore seen to be willing to share rides with strangers, in return for cheaper fares.

The Singapore-headquartered company said it is launching the service now as its other carpooling platform - GrabHitch - has grown.

"It has grown by about 75 per cent in the past three months alone,” said Grab's Singapore country head Lim Kell Jay at a launch event on Tuesday (Dec 6). "And that gave us the confidence to launch GrabShare as a service, because that shows Singapore commuters are warming up to the idea of sharing a ride."

GrabHitch drivers are mostly private car owners and do not drive for profit. Rides are also pre-booked up to seven days in advance. In contrast, GrabShare trips are on-demand and driven by GrabCar Economy drivers. ERP charges for GrabHitch journeys are borne by the drivers, but this will be split between all passengers for GrabShare rides.

The company also revealed that GrabShare rides will be 30 per cent cheaper than GrabCar rides, but still subject to surge pricing. And unlike other carpooling services, only two passenger bookings are allowed per trip. This, coupled with GrabShare’s matching algorithm, would help minimise long detours for both passengers and drivers, Mr Lim said. He added that this was the new service’s competitive advantage over its rivals.

“When rolling out GrabShare, we did a lot of user studies,” Mr Lim told Channel NewsAsia. “And we interviewed a lot of people who used other ride-sharing or carpooling services before. And one of the pain points that they have is the detours they need to make. We only match one other ride with you, so not more than one ride, so you don't have to take multiple stops.”

In response to Channel NewsAsia’s queries, rival Uber said "long detours is relative", and that additional travel time is "highly dependent on the combined trip".

“A five-minute delay to someone who is already five minutes late can be considered a ‘long detour’, compared to someone who has 30 minutes to spare,” said Leigh Wong, Uber’s head of communications for Singapore and Malaysia. “If riders end up pooling with someone who is on their way to the same final destination, then there might not be any additional time added to the overall trip.”

Uber launched its car pool service UberPOOL in Singapore in July. It said that today, one in three Uber rides in Singapore is an UberPOOL ride. It added that 20 per cent of its more than 5 million daily trips worldwide are UberPOOL trips.

During July’s launch, Uber said UberPool rides were expected to be 25 per cent cheaper than UberX. When asked if commuters were likely to see further changes to fares, with GrabShare rides expected to be a third cheaper than GrabCar, Uber said it has seen increased savings of up to 40 per cent for riders since the launch.

COMPETITION STIFF, DRIVERS SCARCE

Transport economist Walter Theseira told Channel NewsAsia that the presence of GrabShare will "further heighten competition" in the private hire market, with it being the first foray into “the exclusive domain of Uber until this point".

But while such services promise better earnings for drivers, and lower fares, Dr Theseira, a senior lecturer at SIM University, wondered if the business model is sustainable.

He said: "If you happen to try to book a ride-share or pooling ride and there's no one else who shares the vehicle with you, actually you don't have to pay the full amount. So in that case, the driver would actually be making less, unless the driver were to get an incentive top-up from the platform.

"So without the volume, you won't get the efficiency, but to get the volume, both companies and any players in the market are basically prepared to bleed money.”

Both Grab and Uber have raised considerable funds over the years, but Dr Theseira said it would be difficult to judge the commercial success of the companies’ carpooling ventures. “How successful is this? All the data is held pretty closely to their chest by the operators, and I think it's hard for observers to know what's really going on in terms of the economics,” he said.

Dr Theseira predicts that “what's going to happen in the end is that the most well-capitalised player is basically going to win out”. And at that point, observers will have to see “if they can actually commercially sustain themselves without throwing these kind of incentives at the market.

“Quite a lot of drivers in this industry are basically making ends meet through getting the incentives from the operators,” he said. “And if the incentives evaporate, some are going to reconsider whether they want to stay in the industry. And the real scarce resource in Singapore is actually the driver."

Driver incentives change every week, Grab said. This week, GrabCar drivers will earn 1.5 times the fares if they take GrabShare passengers.

The company also said it plans to expand the GrabShare service to other markets in the region, but did not specify a timeline.

Source: CNA/ly

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