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Is Ride-Hailing in India Still Stuck in the Middle Lane?

November 28, 2018

By Shantanu Nandi Majumdar

India’s mobility sector is at the cusp of a massive transition. It started with growing purchasing power for consumers to buy their own passenger and commercial vehicles but has evolved into something quite different. Customers in India have no shortage of transportation choices with an extensive public transit network and now app-based ride-hailing services and app-based self-driven car rental services. Note that in India, the term “self-driven” is more literal – the renter is allowed to drive the vehicle themselves rather than requiring a driver. This is yet another example of the profound differences across regions.

With hundreds of millions of potential customers who need to travel frequently (and quickly) in their daily lives, combined with rapid digitization in even the most rural areas of India, the presence of these alternative modes of transport has disrupted the industry – making the market one of the most competitive.

A recent J.D. Power survey in India found that 43% of respondents have used an app-based ride-hailing service. This translates to the ride-hailing segment in India generating an estimated $371 million in full-year projected revenue in 2018, growing at the rate of 20% a year – and it is on a path to keep growing. By 2022, the adoption and penetration of ride-hailing services is set to rise to 3.9% with 58.4 million users.

App-based ride-hailing services present a unique opportunity for industry players to mark out different business segments to cater to the different needs in the different markets. There is no need for a one-size-fits-all approach.

Two of the biggest ride-hailing apps in India, Ola and Uber, are a testament to the rapid pace of the sector’s growth. Their customized offerings provide a choice of vehicle type for their customers and passes for frequent users.

Top Considerations When Using Ride-Hailing—India

Although the growth of app-based ride-hailing services is partially dependent on customer demographics, preferences and the growth of technology, there is no denying how easy and convenient these apps are. With low cost cited as the top consideration for using ride-hailing services, particularly among 18-34-year-olds, market players must find the sweet spot between cost and innovating.

However, according to the same survey, a very sizeable group still prefer to own their own car. With ride-hailing services so widely available by multiple providers, why is the uptake still so low? Personal safety/privacy was the second biggest concern after the availability of a ride or vehicle, particularly for women.

Top Concerns When Using Ride-Hailing—India

Most women surveyed also expressed an interest in using a women-only app-based ride-hailing service, a service already introduced in other countries.

For the mobility industry in India to shift into the next gear, there needs to be a cohesive effort from stakeholders outside the of the mobility industry. This includes the government in India which has already put in place several initiatives to boost ride-hailing and help the mobility sector curb its emission and pollution rates. There are also plans to allow buses, motorcycles and autorickshaws to share rides – improving overall travel conditions for the public.

App-based ride-hailing players can also rise to the occasion by:

  • Informing and educating consumers by way of promotion or advocacy, especially those above age 50. The survey found that this group is the least likely to use such services.
  • Offering more customized options as required by different customer segments – some may need just point to point travel, some may need a more premium ride option, women may need a women-only service, or there may be a requirement of multi-modal transport that is optimized for cost or travel time.  
  • Understanding that customer service excellence is also important. According to the J.D. Power survey, 67% of respondents said it is important to have the ability to pick a driver trained in customer service excellence rather than one who is not.
  • The automobile manufacturing sector can also further contribute to app-based ride-hailing services via purpose-built vehicles which can remedy issues pertaining to current vehicles in the market, in terms of costs, efficiency and emissions. 

While the implementation of such initiatives and their influence are still in their infancy, a more unified effort to bring in regulatory support will enhance the benefits for all. However, there is a still clear preference in India to own a vehicle.

Preferred Mode of Transport—India

These alternative modes of transport are progressively gaining momentum in India. Besides app-based ride-hailing services, there is an increasing number of other innovative solutions emerging in India such as self‐driven car rental services, albeit at a slow uptake rate. With a population of over one billion people becoming increasingly comfortable with a digital way of life, these services offer a convenient and cost-efficient way of travel. However, to reap the perceived benefits of the service, like reduced congestion, emission and costs, the service needs to be replicated in more regions to boost the sector’s growth – a task that will require all hands-on deck.

As alternative modes of transport continue their path of disruption, the need to understand how consumers want to travel now, and in the future, becomes of utmost importance. Regardless of whether your company operates within India or another region, J.D. Power is committed to providing you with critical consumer insights that will help you to develop a market-focused customer service excellence program for ride-hailing.

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The information contained herein has been obtained by J.D. Power from sources believed to be reliable. However, because of the possibility of human or mechanical error by our sources, J.D. Power does not guarantee the accuracy, adequacy, or completeness of any information and is not responsible for any errors or omissions or for the results obtained from use of such information. 

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Majumdar Shantanu Nandi Majumdar
Regional Director, Automotive Practice, J.D. Power

Shantanu leads the automotive practice across several APAC markets including India, Philippines, Malaysia, and the UAE. Shantanu is a subject matter expert in the areas of automotive retail experience and customer retention, and product quality and is a sought-after commentator on the disruptive forces acting on the industry including shared mobility and subscription services.