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TRANSPORT & LOGISTICS | Marianne Estioco, Singapore
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Uber, Grab defend shrinking incentives for drivers

Their driver base is still growing.

Jason, a Singaporean cabby, used to be able to get passengers fairly easily using booking apps Uber and Grab. He said that when the apps first launched, the two booking apps dangled many incentives to motivate drivers to take bookings. There were also more passengers then, Jason said, but everything soon changed.

"Ever since more taxis have entered the fray, it has been very competitive to get bookings and incentives are much less now," Jason noted.

Car booking apps like Grab and Uber used to pose a headache for incumbent transport operators, but a report by CIMB asserted that the taxi drivers earn substantially more than Uber and Grab drivers.

CIMB drew its data from interviews with over 30 drivers. The report notes that in the early days, driver incentives amounted to roughly $1,000 to $2,000 in a week. This prompted many taxi drivers to make a switch to Uber and Grab. However, incentives have since fallen to just $200 to $300 per week, CIMB said, which is a sign that both apps are already satisfied with the size of their driver pool.

“Taxiing should remain the choice for serious drivers who depend on driving to make a living. U/G driving works for casual drivers who are less concerned about earnings and for those who need a car for business/family use and want to defray the cost by earning an income out of it,” CIMB said.

“We expect Uber/Grab to continue reducing their incentives granted to drivers in order to seek or optimise their profit. Incentive-cutting will lead to further downside for Uber/Grab drivers’ earnings. We foresee more ex-taxi drivers who were attracted to join Uber/Grab by the high incentives returning to the taxi business,” CIMB added.

Incentives are not the only way to keep drivers, said Grab Singapore General Manager Lim Kell Jay, adding that Grab takes care of its drivers in a "holistic and sustainable" way. 

"Financial incentives are one way of getting drivers on the roads at peak hours to meet commuter demand, and we’re also looking into other ways to make driving for Grab even more rewarding – by increasing their job volumes, and reducing their operating costs," Lim said. 

“We believe that not only is there sufficient room for private hire vehicle and taxi services to co-exist, both are necessary to bring positive change to the transport industry as a whole. The driver pools for both services continue to grow as people start to see driving as a possible alternative and – for many – a primary source of income. Correspondingly, demand is growing as commuters start to see both taxis and private hire cars as a fast and affordable way to get around,” said Lim added.

Meanwhile Uber's general manager for Southeast Asia Chan Park said that the ability to earn extra cash remains a key motivation for drivers who sign up for Uber.

"The number of driver partners has grown exponentially in Singapore and continues to grow rapidly as more and more individuals understand and realise the unrivalled benefits that Uber's technology empowers them with - from flexibility, to a sustainable alternate or supplementary come stream, to becoming an entrepreneur. Our growth in Singapore, our first city in Asia has been phenomenal. In less than 3 years, we've already created tens of thousands of flexible work and entrepreneurship opportunities for Singaporeans, up from just a few hundred when we launched in 2013,” said Park.

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