Upping the ante among cab aggregators Uber and Ola, Mukesh Ambani-led Reliance has acquired as many as 600 cars to kickstart their app-based cab service called 'Reliance Jio Cabs'.
While Reliance has denied the news, sources say Jio is all set to disrupt the sector after shaking up the telecom industry. Ola and Uber may merge to take on the deep-pocketed rival.
How big is the taxi service business in India?
Taxi companies served nearly 500 million rides in 2016, impressively up from 130 million rides in 2015, according to a ReedSeer report. The Indian cab aggregator market that is currently dominated by Ola and Uber is poised to touch at least $7 billion by 2020.
More details about Reliance Jio cabs
Reliance is likely to compete in the taxi service segment with aggressive pricing and has hired consulting firm EY to come up with pricing strategies that get them market leadership.
Reliance is not only planning to own their cars, they may also use their CNG business to support Jio cabs and offer 4G services as a bonus. Drivers will be better incentivized too.
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Advantages of special access to Reliance CNG
CNG fitted taxis incur an average cost of Rs. 4/km, which would be lowered for Jio Cabs as Reliance will provide these taxis with their own CNG. Reliance will also start their exclusive CNG filling stations to reduce the time taken to refill these taxis.
Uber and Ola already facing the heat?
Ola and Uber have recently decreased their incentives for drivers, who have complained that reduction was substantial. In Bengaluru, some angry Uber drivers even vandalized company office in protest.
Jio is planning to launch the services in Bengaluru and Chennai first and then move on to Delhi and Mumbai. Smaller cities, starting with Bhopal and Jaipur, will be pursued as "mixed strategy" alongside.
Ambani denies speculations of Reliance launching Jio cabs
Refuting widespread speculations, Mukesh Ambani announced Reliance Industries has no plans to launch an app-based taxi service.
A Reliance spokesperson tweeted the report is "WRONG and DENIED" after an online publication wrote Jio had already ordered 600 cars.
Officials said the company is not looking to diversify into unrelated sectors.