Thanks to their technology, ride-hailing companies have had an undeniable impact on mobility in urban areas. They’ve also been big on combating the climate crisis, this being a huge plus on their part.
What’s more, they are making cities in this century more habitable and it’s difficult to imagine a time when their services were nonexistent.
Despite their popularity, unfortunately, the industry isn’t as profitable as you’d think. In the United States, Lyft and Uber happen to be the top dogs where ride-hailing is concerned. However, these two companies have had a disastrous 2019.
A $1.2 Billion Loss
Who doesn’t know of their regrettable IPOs? And Uber just released a report on their latest earnings, or should we say losses. Between July and September, the company made losses of approximately $1.2 billion.
So, what’s going wrong for the otherwise very popular Uber? Business Insider’s opinion contributor Ibrahim AlHusseini blames the company’s business model claiming that it is not viable, in addition to stiff competition from its fiercest rival Lyft, among others.
al-Husseini thinks that the only way Uber can save itself is by acquiring Lyft, effectively getting into bed with a company drawing in a significant number of customers.
For some time now, Uber has been looking to control the entire or at least most of the target market. According to al-Husseini, they need to do that ASAP, or else they’ll be out of business.
The opinion contributor argues that so far, nothing they’ve tried works. Yes, the company now has more drivers, which translates into more passengers and hence more business, but they are having to attract customers by lowering their prices.
As AlHusseini puts it, Uber will continue lowering their prices as long as they continue facing stiff competition.
By initiating a merger with Lyft, Uber stands to gain more control over the market, and will at least start to make profits.
Should they delay, al-Husseini says that Google will see this as an opportunity to acquire Lyft, who if you already didn’t know, is working with Waymo already.
Such a move would create an even bigger monster for Uber if you think about it. Google, Waymo, and Lyft – that would be stiff competition taken to a whole other level! Google has Waze and Maps, and it isn’t rocket science to figure out just how well these two pieces of software fit into the ride-hailing service.
All the same, just acquiring Lyft won’t solve all Uber problems. al-Husseini opines that the company needs to broaden its thinking, especially when it comes to how it relates to the government. Ask this writer and he’ll tell you that they need to be more collaborative with those in authority. They make policy after all, don’t they?
Fail to do this, AlHusseini continues, and they’ll have no one to blame but themselves once they hit rock bottom. Rigorous marketing, subsidized rides, and research into more initiatives won’t pay dividends if Uber doesn’t reinvigorate its relationship with the powers that be.
And by the way, save for Lyft, the government is Uber’s biggest competitor. Public transportation is supported by taxpayer money, and admittedly, draws in lots of customers. You get the point now, don’t you?