Uber stalls its car leasing scheme in India owing driver unrest

Uber has reportedly stalled its much touted car leasing strategy in the country after some drivers returned the leased cars back after significant drop in incentives given to them. The company had planned to buy 15,000 cars and lease it to the drivers to increase its market share in one of the world’s fastest growing ride sharing market, however, it has to stop the scheme after providing only 1/3rd of the cars.

The bone of contention is the amount of incentives that drivers get from Uber every month, which have gone down significantly in last 4-5 months. From getting double of their monthly revenue from the firm as incentive to currently being charged 20% of their monthly revenue as commission to Uber, the margins have been squeezed away from the taxi business.

Although the firm started the leasing scheme in a bid to increase its market share and lock drivers on its platform for longer to avoid switching to Ola, it has become a liability to the drivers now that the incentives have fallen down. Under the leasing scheme, the drivers are asked to pay a down payment of INR33,000 at the start and INR5,500 every week for 3 years leading to doubling of the total cost to the drivers if they had taken service loans for the car instead. With high incentives it was worth the risk, but now with wafer thin margins, drivers are giving the leased cars back to the company.