Automotive > Connected Mobility Blog

Mobility Gets COVID-19 Reset

by Roger Lanctot | Apr 10, 2020

Four mobility service operator CEOs, an industry expert, and a moderator from The Information conducted a fascinating discussion this week regarding the current state of mobility around the world. The conclusions boiled down to the expectation that the industry is sufficiently resilient to bounce back, whenever the global economy recovers, that there will be changes and possibly the need for greater control by operators, and that they will be in position to contribute to that recovery in cooperation with public transportation.

The three top takeaways of the Webinar were:

  • Where ride hailing is still able to operate, business is down by 80% or more. (Outright ride hailing bans are in place in multiple geographies.)
  • All ride hailing operators have shifted to food and grocery delivery and have added the transportation of emergency personnel and equipment.
  • Delivery services have proven to be an inadequate replacement for normal ride hailing activities resulting in substantial reductions in revenue and driver compensation and the loss of thousands of drivers across multiple platforms.
  • Several participants noted the potential for consolidation in the ride hailing sector.

It is worth noting, too, what was missing from the conversation:

  • There was no discussion during the session of the need for barriers to be installed in individual vehicles (a measure that has been taken by DiDi Chuxing in China) between the driver and the passenger for obvious safety and security purposes.
  • There was an assumption or expectation of near universal regulatory acceptance or outright support of ride hailing services by municipal authorities - including as a subsidized alternative to mass transit, which has also suffered from service reductions or shutdowns around the world.
  • There was no acknowledgement of the existence of competing taxi services and how they might interact with ride hailing operators - or the related evolving regulatory environment.
  • None of the operators wanted to discuss the prospect of treating their drivers as employees, with the possible exception of Will Coleman, founder and CEO of Alto, which owns its cars and employs its drivers, and commentator and sector expert Harry Campbell of the RideShareGuy blog and podcast.
  • No one commented on the prospect or possibility ot testing drivers.

In response to the COVID-19 pandemic, Strategy Analytics has been forced to rethink its global ride hailing forecast and the short- and long-term impacts on the industry. Those perspectives are reflected in a recently published report and Scenario Planner accessible to Strategy Analytics clients here:

The unique individual perspectives of The Information Webinar participants are worth noting:

  • Ming Maa, president of Grab, which has the most diversified platform of all of the Webinar participant operators indicated his expectation that the COVID-19 "recession" would last 24 months. His perspective was notable given the breadth of the Grab portfolio which includes lending, advertising, and insurance - and its potential resilience. He mentioned Grab's focus on B2B relationships and contactless payment methods and a unique temperature-taking solution for tracking the entire package delivery and handling process to instill customer confidence and security.
  • Daniel Ramot, co-founder and CEO of Via, says that the coming economic crunch will influence consumer transportation behavior as much as COVID-19 concerns regarding social distancing. He suggested that under depressed economic conditions, consumers will be seeking, will need, low cost transportation options and that need will override any hesitation to use shared or public transportation options such as Via.
  • Markus Villig, the CEO of Bolt, noted the profitability of ride hailing as the key propellent of the ride hailing sector's post-COVID-19 recovery. By way of contrast, he noted that scooter operators, many of which have either paused or shut down their operations, are less profitable and will require a complete reboot. The key difference between ride hailing and shared scooters is clearly the limited capital investment for ride hailing operators - using as they do, non-employee drivers with non-owned cars.
  • Will Coleman, CEO and founder of Alto, is a unique ride hailing operator in that the company owns its vehicles and hires its drivers. Coleman said that the COVID-19 crisis has highlighted the importance of control - by which he meant control of the cars and the drivers and control of the product or service. Coleman cited his organization's use of cameras in all its vehicles and the setting of specific and enforceable policies and procedures around training and vehicle cleaning, among other things. He said that Alto's controlled approach will be necessary to overcome passenger fears once the economy re-opens.
  • Harry Campbell, founder and CEO of The RideShareGuy blog and podcast, noted how the gig economy has benefited from operating in strong economic times and that the onset of COVID-19 represents the first real test of the model. The current crisis has sexacerbated existing stresses in the delivery and ride hailing industries which had already been stimulating protests and job actions. COVID-19 has added health and safety concerns, but has also generated a surge of new delivery driver applicants, forcing operators to limit applications - even as existing ride hailing drivers are fighting for unemployment benefits, minimum pay, and employee status.

The Information Webinar participants tell us that they have the resources to persevere through the crisis. They are all making critical contributions to economic activity and emergency response during the crisis. They plan to participate in the recovery - and they are prepared to weather what is likely to be a long road back to the status quo ante. A video of the Webinar is available to subscribers to The Information here:

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