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November 03, 2015

Why Uber is Not Going to Stop Anyone (in India) from Owning A Car Anytime Soon

Deepak Shenoy of Capital Mind has an interesting post on MediaNama titled "The Economics of Using Uber in India". Extracts:
Uber advertises its lowest fare in Bangalore at Rs. 7 per km charge but that is utter bull. For an average 10 km ride in the city, it costs much more:
a Rs. 35 base charge that has no free usage, which would be Rs. 3.5 per km.
Rs. 7 per kilometer run
Rs. 1 per minute as a driver fee. For an average of 3 minutes per kilometer this comes to Rs. 3 per km.
These add up to Rs. 13.5 per kilometer. That’s how much you pay for an auto as well.
...The annual costs of a car are tiny nowadays (Rs. 1 per kilometer, assuming Rs. 12,000 service costs for Rs. 12,000 driven). So if my car gives me 12 kms to a liter of petrol, i’m still paying just Rs. 5.5 per km for petrol and Rs. 1 for parking.
Add to this the convenience of owning a car, the ability to get groceries from hypermarkets that can’t or won’t deliver, the ability to drive your kids to a location just 2 minutes away because walking will kill you (welcome to Bangalore, just don’t walk anywhere). And the underappreciated advantage of being able to just up and leave at 6 am to smell the fresh air in the western ghats.
And then, Uber cars are not available when you want them – wait times are upwards of 10 minutes most of the time, unless you’re in a favoured location. Then, there are spikes – if it rains, Uber goes to 1.5x “surge” pricing. All this will not vanish because drivers too have their economics which ensures such practices (long wait times, surge pricing) will continue. 
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