Dreams of Ola, Uber drivers crash as incentives trickle and loans catch up
Ola and Uber have been hit by drivers going on strikes in city after city.
Just last week Uber took action by approaching the Bombay High Court and was seeking Rs 12 crore in compensation from driver unions and groups over the losses caused due to strikes.
It further alleged that these driver unions going on strikes are interfering in their business operations and are even threatening Driver Partners of the company.
From Delhi to Bengaluru to Mumbai and some other cities, Uber and Ola drivers have been going on strike regularly. Just last week Uber and Ola drivers in Delhi staged a strike for a nearly 2 days.
Some drivers had earlier striked for 13 days which caused the disruption in Uber and Ola's services in places such as Delhi, Noida, Ghaziabad, Gurgaon and Faridabad.
These drivers have been protesting low fares and low incentives that these taxi-hailing app companies are now offering.
While the courts have come to the rescue of these companies at the moment, the strikes don't seem to be coming to a stop any time in the near future.
The large incentives that earlier drove many drivers to Uber and Ola are now down to a trickle as these companies look to stem their cash burn.
Just last year, Uber was advertising a monthly income of Rs 1 lakh to attract new drivers with their incentives. This was more than the per capita income monthly of an average Indian.
Ola too offered high incentives such as this to attract drivers to their app service.
Ola had cut driver incentives based on the number of trips completed by as much as 20-40% in Delhi as compared to the previous year, according to an Economic Times report.
Even Uber had tweaked its incentives model to reward drivers bases on earnings and not on the number of trips, said the report.
While the going was good for drivers when the incentives were high, many took loans to buy cars and run them as taxis on Ola and Uber's platforms. With incentives, coupled with higher demand due to less cabs, drivers were earning anywhere between Rs 3000-5000 per day.
However, now it has become difficult to make ends meet and pay their monthly EMIs as the numbers of taxis have catapulted and incentives are on a downswing.
This has resulted in many drivers defaulting on their car loans.
The defaults on vehicle loans have risen so high that in State Bank of India (SBI) in Bengaluru have put the brakes on new loan disbursals to Ola drivers and are pushing to recovery of dues, according to an ET report.
It said that nearly a fifth of its loan book in Bengaluru is defaulting and the total default amounts to Rs 60 crore in the city.
A reason why many drivers are going on strikes is to increase their incentives so that they can pay for the car loans.
What began as a dream job for drivers, has now turned into a nightmare for many.
With low incentives and gathering EMI payments, it seems unlikely that Uber and Ola's troubles with drivers are going away anytime soon.