All is not well in the ride-sharing economy dominated by Ola and Uber. In cities like Bengaluru, there seems to be a supply crunch of cars and drivers on the ride-hailing platforms, which means consumers have much longer waiting time for their rides.

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The problem is also affecting other markets such as Mumbai to a certain degree. There are two factors that have hit Ola and Uber drivers over the past couple of years.

Incentives are no longer at the high of 2015-16, when thousands of gig workers had jumped into the profession and even bought their own vehicles on loans to ply on the ride-hailing platforms.

With a fall in income, drivers have struggled to repay their loan amounts and in cities like Bengaluru, it has led to thousand of cars being seized by financiers, according to driver associations and industry experts.

Adding to the supply crunch is the steep fall in lending to this segment, with financing industry members citing a 50 percent fall in exposure from 2016.

Data from Redseer shows that driver incentives stood at close to 59 percent of gross booking value three years ago — and this proved to be a huge driver magnet. These incentives have since fallen to around 8 percent of gross booking value, which have resulted in drivers turning to other gigs.

The drastic fall in incentives has been particularly hard on drivers who bought their own vehicles. Many of them have found it difficult to service the vehicle loans they had availed, even if average daily rides have risen from around 1 million in 2016 to over 2 million in 2019. This has prompted many drivers to turn to other professions which offer a steady income.

Many drivers have also seen their vehicles being repossessed by financiers for non-payment.

Tanveer Pasha, head of the Ola Uber Driver Association in Bengaluru, says 18,000 cars were seized over the last 12 months, which has led to the supply crunch of vehicles for consumers.

However, industry experts and lenders say the number of repossessions in Bengaluru could be at around 4,000 cars.

The association, meanwhile, also blames a growing apprehension among lenders to finance such vehicles for a fall in fleet addition.

"We have asked financiers to not put pressure on drivers and give more time for payments," Pasha said. "Banks are not giving loans to us, because they don't have liquidity. They are not giving new vehicle loans," he added.

Lenders admit they have become more cautious regarding their exposure to this segment.

V Ravi, chief financial officer, Mahindra Finance, said their lending to this segment has come down by 30-35 percent. "We used to finance within commercial car segment 15 percent in 3-4 major areas, now it is 8-10 percent ... within commercial car portfolio it has come down to 2,000 drivers from 6,000 earlier," he said.

Ravi said that between 2016 and present, lending to the market has come down by 50 percent as lenders are turning extremely selective in disbursing loans to driver/owners.

"They now do a much more stringent financial assessment and cash flow assessment. They check factors such as routes, existing number of cars running on the route, industries/residences nearby, background checks conducted in hometowns of migrant drivers," he added.

Lenders also say that the rush to buy commercial cars which was seen when Ola and Uber first appeared on the scene may not be replicated soon.

"Ola and Uber will never come back to their

Ola and Uber did not comment on the story.

Driver associations across states have also taken up the issue with the Union transport minister in recent months. Last year, thousands of drivers in Mumbai had gone on a strike for days against Ola and Uber's policies, impacting customers.

Earlier this month, the Maharashtra Rajya Rashtriya Kamgar Sangh sent a letter to the traffic commissioner about drivers being harassed by traffic officials and also urged the authorities to ensure companies like Ola and Uber offer drivers ID cards.

A longstanding demand of driver associations has been to push Ola and Uber to treat cab drivers as employees, not partners.

A recent bill passed in California on these lines is a ray of hope, and they are also counting on the government's move to bring the gig economy under a social security scheme.

But until this happens, the supply crunch is likely to continue. What does that mean for you as a customer? A longer waiting period to book cabs and possibly more cancellations.

First Published:Nov 11, 2019 11:08 AM IST