Ride-sharing giant Uber may limit its car taxi services to parts of Bangalore as the 10% commission structure in the state makes the vertical operationally unviable.
“Currently our commission in Bangalore is capped at 10% of the fare collected. It’s not financially viable. If our costs cannot be covered by commissions, we will need to find ways to offload costs that may impact the driver and passenger experience. In the face of these commission caps, we may have to make the difficult decision to limit Uber Auto to certain parts of Bengaluru where the service is viable,” the company said in a blog post on Tuesday.
The move comes after the Karnataka High Court imposed a 10% cap on commissions, excluding GST, on October 14 as an interim arrangement to find consensus between the state transport department and companies. app-based carpools operating in the state. .
Uber said the commission it charges is used to cover the costs of value-added services, including GPS tracking, safety hotline, 24×7 phone calls and in-person support, driver and travel driver insurance and law enforcement response assistance in addition to investing in building and operating the platform which includes technology and engineering expenses and marketing to onboard more drivers and passengers.
“Facilitating a market is not free. Commissions are used to cover our costs and make the business model viable. To be absolutely clear: our commission ≠ our profit. A flexible commission structure, and one that ensures a fair margin for aggregators, will ensure the sustainability of auto e-hails and also encourage investment in the space, leading to the introduction of new features and services,” reads the blog.
According to the company, more than 50,000 car drivers use its platforms and more than 10,000 people in the city use Uber Auto every month. He said the current fixed metered rate does not adequately compensate drivers for the extra distance traveled and time spent picking up a passenger at their door.