Why On-Demand Car Services Are Changing How India Drives

There's been a change in the attitude of urban Indians towards moving from one location to another in the last few years. It's not sensational and it's not something that has happened overnight. But the attitude is changing, albeit at a snail's pace, as in the rest of India, from "I must own a car" to "I need a car when I need it. Five years ago, even the most optimistic analysts could not have foreseen how that change will affect the mobility market.

A Cost-of-Car Ownership Americans are Not Told About

The sticker price of any automobile doesn't begin to cover all the costs. In theory, this is something that most buyers are aware of, but they don't really appreciate this until after they have owned for awhile, and they start calculating this after three years.

Drive a car in a city such as Delhi-NCR and Pune. It's an on-road price of say, 14-16 lakh rupees. Throw in the financing charges at the current rates of interest and that jumps up. Next up is insurance and the comprehensive insurance for a new vehicle isn't inexpensive. Annual maintenance, occasional repair after meeting a pothole (which are not gentle in India) and petrol and parking space in a residential society (costs between Rs. 2000 to Rs.8000 per month depending on the city). You can easily spend as much as a good meal plan in a month on parking in Mumbai.

When all is said and done, what you will get is a car that will cost you between 15 to 25 thousand rupees a month, depending on the consumption, the city you are in and your traffic fine fortune. But for a family that leaves that vehicle in the basement for 12 hours a day, that figure doesn't seem so attractive anymore.

This is the math which on-demand services are exploiting (not by advertising, but just by being there as an alternative, making the numbers visible).

How Indian Cities Bested Any Startup in the Pitch.

If it were your aim to create a set of conditions that would make urban residents opt for not owning cars, you would have to do better than what has naturally occurred in Bangalore, Mumbai and Delhi.

If it hurts, it's legendary and this is the case for Bangalore traffic. Like most Indian metros, the city's infrastructure has not been able to catch up with the growth of the city and a 12 km commute can take as long as an hour and a half or as short as 25 minutes depending on the day, the rain and some of the events which you may not have been aware of. It is not commuting, it's a part time job without pay.

However, there is a little different issue in Mumbai. The distances are greater, there's more organization on the road in some places, but South Mumbai (or the western suburbs) parking during business hours is a joke in and of itself. Often employees spend more time searching for parking than the meeting they travelled to. And once you have found a place you're trying to work out if you'll beat the traffic cop first!

The challenge of scale is an added challenge in Delhi-NCR. Gurugram, Noida, Faridabad and central Delhi are not that close, and when on the red days the expressways get jammed past Gurgaon, even the most ardent car lover starts searching for alternate means of transport.

These cities didn't plan for on-demand car services, but rather the demand for such services was created. They developed it out of the every day inconveniences — a much more powerful motivational force.

It was the Weekend Trip Calculation that changed things.

Where there's frustration there is commencing to work every day, there is a shift of mind in the outstation weekend trip.

Let's take the example of a family in Hyderabad who want to take a drive upto Araku Valley (A beautiful distance but a good 6 hours driving by itself!) This used to be the case of having to drive your own vehicle and then getting tired on the highway, in an unfamiliar area and on your actual holiday as well. After 3 days of leisure the return drive is virtually always worse than it should be!

Silently, this calculation has changed for a lot of Indian families with the advent of on-demand driver services, where you will hire a verified, experienced driver for the day or the trip, use your own car or the driver's, and sit in the back. You are paying for the driver's knowledge, skills and time. You arrive fresh. No fear on Sunday evening of the drive home.

I have had a conversation with families in Chennai and Ahmadabad whose outstation commuting is now akin to booking flights — someone else can do it, it's not something that they are doing themselves. It isn't laziness. It's coming to the realization that driving ability and road knowledge are all services that can be bought and that time spent on a weekend is valuable.

Understanding what On-Demand Car Services really provide – in layman's terms

The attractiveness of such services is not anything. It's a mix of things, that can all be put together to argue for another way of relating to mobility:

- Established background checks, license verification, and driving assessments on drivers: Most platforms run background checks, license verification and driving assessments on their drivers. This is important, particularly on outstation trips, as you won't be giving your car key to a stranger who you found through a WhatsApp group, you will be giving it to someone that comes from a platform that has vetted them and is responsible for them.

First of all, there is a cost efficiency factor to consider, which is the question of whether to purchase a second car or not that many inner-city households must consider. The on-demand math oftentimes wins out — it's always going to be cheaper to pay for a vehicle or a driver when you need it, and not have to pay for insurance, maintenance and ownership costs on a second car four days out of every seven.

Free time for commuting: If you are taking a driver to work, you can relax and do things like answer emails, read or just unwind, which would otherwise be a time of white knuckled driving during rush hour. This isn't to be taken lightly for those who start their day at work.

On-demand services embrace the use cases that are technically possible with personal vehicles, but are not the common ones, such as corporate transfers, airport pick-up and drop at 3 AM or medical appointments where driving is not an option, or elderly parents requiring reliable transport.

- No parking hassles: If you're not behind the wheel, then there are no parking hassles. For urban dwellers who don't have much parking space or who have to pay high rates to park their cars, it helps out a lot.

- Improved road safety results: Fatigue, stress and distraction are all a large percentage of urban collisions. A professional driver who does this as their job, and whose job depends on his/her driving record, is a safer driver than a commuter at the end of a long day's work, on average.

This change in thinking is from owning an asset to consuming a service.

It's the part that the automotive industry is focused on – and for a good reason.
For decades, the car ownership in India was not just about the conveyance of personal mobility and transportation but also had an aura attached to it. It was a milestone – the sort that followed the house, or was concurrent with the promotion, part of a series that was a sign of entry into a specific economic level. You didn't take the plunge and purchase a car because you required one. You purchased it since it meant something.

But that meaning has not been completely eradicated. But it's under threat, especially when the urban millennials and young professionals in their 30s, who have seen their parents go on an auto fetish have seen Bangalore traffic enough to take a different view. Check some of the amazing themes that suits car services blog like look.

It's not that the move from ownership to access is happening in India alone, it's a phenomenon that has occurred in other countries and at a particular level of urbanization and income where time becomes more important than ownership. The rate at which India operates is interesting. Within 10 years, the country progressed from having little to no app penetration to having a gig economy of gigantic proportions, and a digital payment infrastructure. Our on-demand mobility platforms are the ones that need to build the infrastructure of on-demand mobility, which took older markets decades to develop.

That meant that Indian consumers did not have to take some steps. Today's first-time Pune car buyer is making choices that Seoul or London's first-time car buyer made 15 years ago — but with a lot more knowledge, a lot more options and a lot less tolerance for the notion that owning is better than using.

How this Will Impact the Road Ahead

The India on-demand car service sector is still in its infancy. There are real issues: trust is an issue in a market where customer experiences are so different by city and service provider; issues of quality during surge periods; lack of trust in some cities due to lack of driver training; and pricing transparency issues during surge periods.

All of these are excuses to not dismiss the move. Rather, they're profiles of any emerging market in the early stages, prior to its consolidation and standardization. The path of travel is clearly defined, even in the face of an uneven roadway.

It's interesting to see how the car industry will react. Carmakers already have begun considering alternatives to the car sale — such as mobility partnerships, subscriptions and fleet programs that cater to platforms, and not individual car purchasers. Much of this is going on under the radar, and some is still in the planning stage. But the industry knows a 35-year-old professional in Gurgaon, who is considering getting a second car versus subscription for personal drivers is someone who can be made a loyal customer by offering vastly different products and services than his parents.

But the association of India with the car doesn't seem to be coming to an end. But at least, the number of vehicles being sold would indicate it's still getting more severe in smaller cities and towns where there's little in the way of public transportation and distances are real. However, in the metros where cars and buses take a heavy toll on time and energy, it is taking a different shape. To an increasing number of people car ownership is no longer a fact of life but a choice, and one that has to be decided based on the real value of the car, not the symbolic value.

It's not as much of a change as the headlines would indicate. But, for a business model based on the premise that everybody should own the vehicle driven, it's a huge one.