Uber CEO says Rapido is bigger threat than Ola in India’s ride-hailing market

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Uber CEO Dara Khosrowshahi has said that the company sees domestic player Rapido as a stronger rival than Ola in India’s ride-hailing market.

“Ola used to be our main competition, now the tougher competition in India is Rapido,” Khosrowshahi said in a teaser of his full interview on Zerodha co-founder Nikhil Kamath’s podcast People by WTF.

His remarks hint at a shift in the country’s competitive $13-billion ride-hailing market once dominated by Ola. It comes just days after the Central Consumer Protection Authority (CCPA), the country’s top consumer watchdog, slapped a penalty of Rs 10 lakh on Rapido for alleged misleading and unfair trade practices.

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Rapido was founded in 2015 as a bike taxi aggregator. The Bengaluru-based startup has since diversified into auto-rickshaw and cab services. It recently started testing a beta version of a food delivery app called Ownly in Bengaluru, as per reports.

The platform’s ride-hailing services are available in over 100 cities across India. Rapido has looked to raise fresh funding and raise funds by targeting tier two and tier three cities where there is strong demand for affordable mobility services. Its focus on two-wheeler and three-wheeler mobility has also helped Rapido become popular among price-conscious consumers as India returned to normalcy post-pandemic, analysts estimate.

However, its rapid growth has also led to regulatory scrutiny.

The CCPA, headed by Chief Commissioner Nidhi Khare, had taken suo motu cognisance of Rapido’s two ad campaigns — ‘Guaranteed Auto’ and ‘AUTO IN 5 MIN OR GET ₹ 50’, and found they were “misleading” and asked the ride-hailing service to discontinue them immediately.

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CCPA issued these directions under various sections of the Consumer Protection Act, 2019. “It may be noted that Rapido offers its services in over 120 cities, and the impugned advertisement ran for at least 548 days (approximately 1.5 years), being propagated in multiple regional languages across the country. Therefore, the CCPA finds it necessary to impose a penalty to safeguard the interests of consumers,” the order read.

Ola, on the other hand, has shifted focus beyond mobility to EV manufacturing, battery production, geospatial technology, and artificial intelligence (AI). As a result, its market share has shrunk with parent company Ola Consumer reporting a decline in revenue to Rs 1,906 crore in FY24 from Rs 2,135 crore in FY23.

Parent company ANI Technologies’ consolidated revenue also dropped slightly to Rs 2,203 crore from Rs 2,277 crore. However, the company also narrowed its consolidated net loss to Rs 328.5 crore from Rs 772.2 crore the previous year in FY24 due to lower employee benefit expenses.