In Part 1 of this series, Citizen Matters had talked about carpooling startups in various cities and how people are availing these facilities.
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Despite the emergence of a number of players in the field, however, there are various challenges that these companies are grappling with. The biggest challenge carpooling entrepreneurs face is that the concept itself is not yet so popular in India. Concerns about privacy and security are common, so is the general feeling of discomfort in travelling in a stranger’s car. Hence a large part of these entrepreneur’s efforts are invested in popularising the concept and getting the support of authorities.
The corporate connection
Many carpooling entrepreneurs are trying to increase their user base through partnerships with companies, mainly tech companies and parks. The nature of these tie-ups vary – some of these are only for the carpooling startup to set up a stall in the company’s campus and publicise their app, while in other tie-ups the company actively endorses the app to its employees and incentivises those who carpool. The carpool app sRide, for example, has tie-ups with about 250 IT and non-IT companies across India, including Infosys, Capgemini and Wipro.
Dayakar Reddy, Executive Vice President at Capgemini India, says that their tie-up with sRide has helped them meet their sustainability goals. “Our global CEO had signed an agreement to reduce emissions at COP21 in Paris. Of all Capgemini employees, half are in India. Hence we have a greater responsibility to meet targets for emission reduction, and carpooling helps in this.”
Carpooling has also cut the company’s transport costs for employees. “With carpooling, the routes of our company buses have reduced and become more harmonised,” he says.
As part of the tie-up, Capgemini emails its employees about the sRide app and sensitises them to the benefits to the environment from carpooling. About a fifth of Capgemini’s India employees carpool now, a large number of them women.
“Employees use it as their homes are often far from the office, and commute by public transport is difficult. Even if they take the company bus, it will have many stops and they have to travel a longer route. With the app, they can see many other employees living nearby who have been rated on the app, offering rides at different timings,” says Reddy.
Capgemini incentivises carpooling employees with preferred parking and certificates of recognition.
Arun Bhati, COO of Orahi carpool app, says they have tie-ups with about 300 companies in Delhi-NCR. “The Airtel office in Gurgaon had to arrange parking outside their premises as they did not have enough parking space. After tying up with us, they reserved 1000 out of their 2500 parking slots for those who carpooled. Thus these 1000 slots could accommodate cars carrying some 3000 people,” says Bhati.
However, tie-ups have not been easy for all entrepreneurs. K N M Rao, Co-founder of Quick Ride carpool app, says, “Getting companies’ approvals to hold campaigns in their campus has been time-consuming and challenging. Some companies also asked us to pay for the campaign space, saying it was a commercial activity. Many companies are also worried that carpooling is risky,” he says.
Prajwal Zende, Co-founder of Cloudacar carpool app, says the response from companies has been poor. Cloudacar has a unique B2B model, wherein it only partners with companies to arrange carpooling through Uber cabs (not Uber Pool); it does not have direct users on its platform.
“The idea is to have companies inspire a section of their employees to turn to carpooling, instead of arranging cabs or have employees come in their own cars/cabs. We call it social commute. But corporates don’t consider it a priority,” says Zende. The company had got one round of investment in 2016, and are looking for another round of funding now. Currently they are doing a pilot project with three companies in NCR.
Apart from the lukewarm response from companies, there are other challenges that carpool companies typically face. Entrepreneurs say that at the time of launch, an app would naturally not have a large number of users, and hence the size of the pool would be small. This is a major reason why many carpooling apps fail.
“If people don’t get enough options to match their route, timing etc after a couple of tries, they give up on the app,” Rao says. But this is a chicken-and-egg situation, because naturally the pool size will increase only as more people start using the app.
“Startups should understand the pool size needed, and have enough users going in a particular direction. But many startups just develop the app, and ignore the business side which is actually 99% of the work,” says Bhati.
Rao says the technology in many apps is not user-friendly or advanced enough either. “The app should have end-to-end solutions. It should have automatic verification and enterprise security features, route matching, display of route/time of travel etc. It should also be dynamic – showing who is going to a particular place at a particular time. Coordination between users and having a cashless system is also important,” he says.
While a majority of Quick Ride users are from Bangalore, Rao says that many Bangaloreans are now skeptical of carpooling apps as many of these shut down shortly after commencing business.
Many startups are optimistic about scaling up, but some aren’t. Chadha of sRide says that user base would increase because of high cost savings in carpooling, and hence scaling up won’t be difficult.
“Except in Delhi which has good metro connectivity, commute is a major problem in all cities. So people do need carpooling, and they are also able to afford it. Options like Ola and Uber are far more expensive, and people can’t use it daily.” He says that some sRide users have taken 600-700 carpool rides just in the past two years. “Even car owners are making good money; some make as much as Rs 5000-6000 a month,” he says.
While Chadha believes the sheer number of users will drive up profits, Vyjayanthi Mala, Founder of WOW (W’heal Our World) app says there is no money in carpooling. “Companies make very little in the transaction between ride taker and giver. In WOW, 5% of the transaction goes to the company, and the car owner can also opt to donate the money to an NGO instead. I expect to break even only in 10-15 years, and even then it would be just enough to cover server costs etc,” she says.
Rao of Quick Ride says they are planning to introduce a subscription model wherein the user pays a small fee for monthly use.
Only a few startups like Orahi have been able to raise funds from investors so far. Bhati says the industry has a good opportunity for growth now with pollution levels spiking in cities, especially in Delhi. However, investors don’t show much interest in carpooling companies as many companies have either shut down or not scaled up, and also because of ambiguity on the legality of carpooling.
No regulation or support from governments
As per the Motor Vehicles Act, 1988, private vehicles should not be used for commercial purposes. This provision could hamper the prospects of carpooling companies, but transport authorities have ignored these companies so far.
B Dayananda, Commissioner at Transport Department, Karnataka, says that they don’t have a policy on carpooling yet. “If carpooling is done informally among friends, it does not concern us. But if a third party is getting financial gains or a commission from it, they need to take permission,” he says. The department had previously banned Ola Share and Uber Pool – the ridesharing services of Ola and Uber – for violating provisions of the Act. It has now written to the centre, for clarity on how the Act would apply to these ridesharing services.
Last year, Niti Ayog had proposed promoting carsharing and carpooling, but the central Transport Ministry had opposed this at the time. The ministry has not announced a policy on this yet.
On their part, carpooling entrepreneurs have been lobbying with governments for support. Bhati says they’ve had discussions with the Delhi government, and that the government is considering creating separate lanes for carpool vehicles. “This will be the big game changer – when separate lanes are built for cars carrying three or more people,” he says. Chadha of sRide says he has had discussions with central government officials, and that the response has been positive. He believes the government would not say no to carpooling, but will only bring in regulations as the industry grows, since carpooling promotes both mobility and sustainability.
Satya Sai Kumar J, research scholar at Curtin University, Australia, says that policy change is essential for carpooling apps to have a large-scale impact, in terms of reducing cars on road. “The government can provide separate lanes for carpooling vehicles. Or it can disincentivise single-occupant cars by restricting parking for them or making it more expensive in some areas like Central Business Districts where land is costlier. Such cars can be barred from parking at metro stations too.”
However, he says that adequate public transport and carpooling facilities should be provided before disincentivising single-occupant cars. For example, the government can promote carpooling around metro stations, so that metro riders may use it for last-mile connectivity. He says that companies, especially IT companies, that contribute to many cars on the road, should also have policies promoting carpooling.
In the meantime, carpooling companies are planning to expand operations to include the general population, and not just professionals in select industries or corporate clients. Currently, most of their users are professionals, mainly from IT companies, as the apps require user verification with a work email id. Carpooling startups are looking at Aadhar or other technologies for user verification, to include the general population also soon. With policy support, these apps could perhaps go a long way in transforming the face of mobility in our cities.