Ride-Hailing Market- Rising Environmental Concerns Aiding Market Growth

Around the world, owning a vehicle is becoming more and more costly because of the increasing petrol (gasoline) and diesel prices, insurance premiums, and many other expenses that are associated with it. Therefore, many people in cities are not buying vehicles, while those who own one are using them sparingly. Instead, they are now opting for shared mobility services to enjoy the same facilities as offered by their own vehicle, without actually needing to own them.

As per P&S Intelligence, due to the cost-effectiveness of such services, the ride-hailing market value is projected to rise to $120.2 billion by 2024 from $50.4 billion in 2018, at a high 13.0% CAGR between 2019 and 2024. In the last decade, such shared transportation service providers have received heavy funding, which has helped them expand around the world. For instance, Uber raised $11-million funding in February 2011 and another $37 million in December that year. Similarly, Ola raised funding of $200 million (INR 1,400 crore) in 2019.

Ride-Hailing Industry Outlook - P&S Intelligence

A key reason large investment bankers and other multinational firms are showing interest in ride hailing is the strong government support for this concept. With the increasing number of vehicles on the roads, the problem of air pollution is becoming graver every year. Moreover, this also causes traffic congestion, which, in turn, leads to the loss of productivity at offices, as people are spending long hours in traffic jams. To remedy both these issues, countries are promoting ride hailing and other shared mobility services, so that the number of private vehicles on the roads can be brought down as much as possible.

Since most of the major service providers are based in Asian countries, Asia-Pacific (APAC) has been the largest ride-hailing market till now. Additionally, the burgeoning urban population of India and China is leading to the rising demand for transportation services. However, as a lot of the people in the cities here still cannot afford vehicles, they are opting for shared mobility. Moreover, these are two of the most-polluted countries in the world, which is why their governments are strongly encouraging people to use less of their personal vehicles.

In the coming years, service providers are expected to witness a massive increase in their revenue in the Middle Eastern and African (MEA) and Latin American (LATAM) regions. In these regions too, the urban population is increasing, which is resulting in the surging demand for cheap short-distance transportation. Moreover, the ride hailing space in these countries is almost unexplored, which is why service providers are expected to make rapid inroads here.

Hence, with the rising need for cost-effective urban commute and the increasing environmental awareness, ride-hailing companies will witness a growing ridership in the near future.