Uber launches hourly cab rental service UberHIRE; cash-only option for now

UberHIRE will not attract surge pricing; base fare for the service set at Rs 449 to Rs 649

Uber is sidestepping its promise of efficiency and increased utilisation of cabs through the on-demand model by launching hourly rentals in India, as it desperately looks to get ahead of local rival Ola in the country.

Renting of cabs on an hourly basis, a popular model of getting around in India, was disrupted by Ola and Uber. Now both companies have offerings that do exactly that, going against their on-demand models that helped them gain massive scale in the country in a short period of time.

Fares for UberHIRE are between Rs 449 and Rs 549 for the first two hours or a fixed number of kilometres, with fares per kilometre after that ranging from Rs 12-13. The fares are a hefty premium over Uber's point-to-point service that starts as low as Rs 6 per kilometre, which are unsustainable but have been forced down due to competition.

The launch of the new service comes at a time when drivers on Uber and Ola's platforms have begun protesting of falling earnings due to reduced incentives and lack of business due to an increased number of cabs. Both companies are desperately looking for models where they do not have to subsidise the cost of rides to run their businesses.

Uber, which entered India with card only payments and for a long time refused to accept cash, is now offering the hourly rentals package for customers that is payable only by cash.

A spokesperson from Uber said that UberHIRE was the first foray for the US company into the hourly rental cab market anywhere in the world. Ola had launched a similar service in August last year, adding to its ever growing list of services and serving an apparent niche for people on sightseeing or shopping trips and business travellers with multiple meetings in a day.

Both companies have launched the service even as they say the market for ride-hailing in India still remains underserved for the demand that exists. In Bengaluru, the largest ride-hailing market in the country, there are an estimated 100,000 plus cabs on the city's roads between the two players.

The cab rental service doesn't seem to be an experiment either, with Ola claiming to have rolled it out in over 85 cities so far. However, the company did not share data on how successful its rental service has been in the six months since its launch. Uber, which is present in a little over 20 cities in India, has rolled out UberHIRE in eight of its largest cities in the country.

Uber and Ola are both burning millions of dollars to keep the cost of rides low for users, while still giving drivers higher payouts per ride. The US company has said it will invest a substantial portion of the $3.5 billion it had raised from Saudi Arabia's Public Investment Fund into growing its operations in India.

Rival Ola has been struggling to raise fresh funds to ward of the attack from Uber and is looking for new avenues to earn revenues. With the competition in the point-to-point cab market forcing both companies to undercut costs on each ride, they are now looking at alternative means to earn revenues.