Uber Withdraws Auto Services In India, Will Others Thrive?

Auto Rickshaws in Delhi (Image Source)

Auto Rickshaws in Delhi (Image Source)

The shutting of UberAuto in the capital, just after seven months of launching its service is raising some serious questions on the auto aggregation model . Though Uber has made it clear that it is a temporary shutdown to solve some problems that will help them scale, the company did not specify a comeback date.

One of the startups focussing on the auto aggregation services in India, Jugnoo, recently raised $3 million from PayTM and others. In a conversation with founder of Jugnoo, Samar Singhla, he said “The model is absolutely fine, players like Uber and Ola are just not focussing on it, maybe because of the less margin involved. Jugnoo is targeting on just the 10 percent of the total market in India and we are doing well.”

Uber was the first taxi aggregator in India to include three wheelers as an option to compete in the intense taxi market in India. The three wheelers are a cheap mode of transportation, plus they have been common in the Delhi NCR region. Seeing Uber, many platforms integrated this option into their apps.

The only thing that could worry the local population was the safety gauge, which was subsequently solved by the taxi aggregators by providing the driver’s information before hand and by tracking them.

Despite of claiming that the auto rickshaws were working well, the company couldn’t keep up with the pace. Uber was unable to expand the service outside Delhi, while OLA on the other hand claims to have auto service in Delhi, Chennai, Bangalore, Pune, Hyderabad and Ahmedabad.

Uber recently received funding from Tiger Global, who was previously backing its competitors in India. The company is planning to raise $2.1 billion in the coming round of funding. At the same time Ola has announced partnership with Uber’s biggest rivals China’s Didi Kuaidi, US-based Lyft and South Asia-based GrabTax. Didi Kuadi was also one of the investors in Ola who pumped $500 million this year. Can Ola survive where Uber failed?

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