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Pre Paid Taxis v/s Self Owned Cars
The Speculation
• Anand Mahindra, Chairman & MD of Mahindra & Mahindra addressed audience at launch of its compact sports utility vehicle TUV 300
• He warned auto industry against rising competition from taxi-hailing companies
• Concern that apps such as Uber & Ola, could push people into giving up on ownership of cars
• Threat to auto industry volumes may arise
• Increasing number of people might want access to transportation & not own object of transportation
How can auto
companies respond to
the speculatio
n
React proactively so that it does not
impact their operations
Upgrade auto models with
technology to attract young
crowd
New vehicle models will have
to get more appealing than
the past
Leverage the opportunity to
supplying to pre paid taxi
companies
Initiatives by Auto companies to beat pre paid taxi competition
• Car makers are now increasingly using cutting edge technology to offer multimedia systems that connect mobile phones to cars
• Technology wherein one can talk on the move, use voice recognition system to make calls & change radio stations without loosing control of the steering wheel are being introduced in cars
• Some of these features found in luxury cars are now making their way into the mass market segment too
• Ford recently started a car sharing initiative in the US that helps people let out their cars to select set of customers to reduce cost of maintaining vehicle
Advantages of Prepaid taxi over self owned vehicles
Pre paid taxis Self Owned Vehicles
Overall Cost of Vehicle
No capital cost or auto cost incurred by user of car
Huge initial cost of autos , car loans applied for purchasing autos may be difficult & lengthy to obtain
Cost of maintenance
No maintenance cost , cost borne by prepaid car companies
Huge maintenance cost for servicing the vehicle, PUC charges, any repair cost due to wear & tear too may be incurred
Convenience Available to use when desired, No parking problem, easy to use mobile apps for booking, extremely short waiting period
May be unavailable due to another family member using the vehicle, parking is always a crucial problem especially in crowded cities
Technology Usually technologically advanced & updated. E.g., Some prepaid taxis even offer Wi-Fi services
Mostly looked upon as an utility vehicle hence no much attention to technology may be given
No Additional Cost
No additional costs like Insurance, cleaning costs, parking charges etc.
Insurance , parking charges & other petty charges have to be borne by user
Offers Pre paid taxi companies have exciting offers from time to time to save cost
Costs remain standard & constant
Conclusion• Choosing a pre paid taxi has many advantages• Convenience is the major factor why people choose pre paid
taxis• An Increase in the use of prepaid taxis does not mean people
are going to necessarily stop buying cars• Even though cost is a major factor, it is not the only one in
consideration while one thinks of owning a car• Reason for buying cars can be mainly related to status among
other factors• With competition from Pre paid car companies, we can expect
car manufacturing companies to produce better cars with updated technology even in the mass market segment
• Car manufacturers should accept competition & work towards improving their products & thus increasing their sales volumes
Images are for representation purposes only