Pre Paid Taxis v/s Self Owned Cars

The Speculation

• Anand Mahindra, Chairman & MD of Mahindra & Mahindra addressed audience at launch of its compact sports utility vehicle TUV 300

• He warned auto industry against rising competition from taxi-hailing companies

• Concern that apps such as Uber & Ola, could push people into giving up on ownership of cars

• Threat to auto industry volumes may arise

• Increasing number of people might want access to transportation & not own object of transportation

How can auto

companies respond to

the speculatio

n

React proactively so that it does not

impact their operations

Upgrade auto models with

technology to attract young

crowd

New vehicle models will have

to get more appealing than

the past

Leverage the opportunity to

supplying to pre paid taxi

companies

Initiatives by Auto companies to beat pre paid taxi competition

• Car makers are now increasingly using cutting edge technology to offer multimedia systems that connect mobile phones to cars

• Technology wherein one can talk on the move, use voice recognition system to make calls & change radio stations without loosing control of the steering wheel are being introduced in cars

• Some of these features found in luxury cars are now making their way into the mass market segment too

• Ford recently started a car sharing initiative in the US that helps people let out their cars to select set of customers to reduce cost of maintaining vehicle

Advantages of Prepaid taxi over self owned

vehicles

Pre paid taxis Self Owned Vehicles

Overall Cost of Vehicle

No capital cost or auto cost incurred by user of car

Huge initial cost of autos , car loans applied for purchasing autos may be difficult & lengthy to obtain

Cost of maintenance

No maintenance cost , cost borne by prepaid car companies

Huge maintenance cost for servicing the vehicle, PUC charges, any repair cost due to wear & tear too may be incurred

Convenience Available to use when desired, No parking problem, easy to use mobile apps for booking, extremely short waiting period

May be unavailable due to another family member using the vehicle, parking is always a crucial problem especially in crowded cities

Technology Usually technologically advanced & updated. E.g., Some prepaid taxis even offer Wi-Fi services

Mostly looked upon as an utility vehicle hence no much attention to technology may be given

No Additional Cost

No additional costs like Insurance, cleaning costs, parking charges etc.

Insurance , parking charges & other petty charges have to be borne by user

Offers Pre paid taxi companies have exciting offers from time to time to save cost

Costs remain standard & constant

Conclusion• Choosing a pre paid taxi has many advantages• Convenience is the major factor why people choose pre paid

taxis• An Increase in the use of prepaid taxis does not mean people

are going to necessarily stop buying cars• Even though cost is a major factor, it is not the only one in

consideration while one thinks of owning a car• Reason for buying cars can be mainly related to status among

other factors• With competition from Pre paid car companies, we can expect

car manufacturing companies to produce better cars with updated technology even in the mass market segment

• Car manufacturers should accept competition & work towards improving their products & thus increasing their sales volumes

Images are for representation purposes only