Uber on road to domination in Australia

From Roy Morgan Research:

New research from Roy Morgan shows that with over 4.4 million Australians (21.5% of the population) using Uber in an average three months the popular ride-sharing app is set to overtake the traditional taxi as Australia’s preferred private transportation service during 2019.

Uber’s 4.4 million Australian customers are now within touching distance of the almost 4.5 million Australians (21.7%) that use taxis in an average three months.

Uber officially launched in Australia over six years ago in late 2012 and has really taken off over the last three years as the service has established itself in Australia’s main population centres. Patronage of Uber has grown from 6.6% in mid-2016 to 21.5% now, an increase of 14.9ppts in under three years.

During the same time period fewer Australians are using taxis but the decline has been far gentler down from 24.4% in mid-2016 to 21.7% now, a drop of only 2.7ppts.

Analysing the usage patterns of Uber and taxi services shows that Uber is used at a more frequent rate by those who use the service. Uber customers take an average of over 4.1 trips in an average three months compared to fewer than 3.8 trips taken by Australians who use taxis…

Unsurprisingly Uber has been a big hit for “Technology Early Adopters” with 40% travelling by Uber in an average three months compared to 30% that have travelled by taxi. Those in the “Digital Life” segment are also more likely to have travelled by Uber (23%) than by taxi (16%).

However taxis (30%) still hold a marginal advantage amongst the “Professional Technology Mainstream” ahead of Uber (26%).

Taxis are also the preferred personal transportation vehicle of choice for the ‘Laggards’ known as “Technophobes”. Nearly twice as many “Technophobes” travel by taxis (17%) than travel by Uber (10%)…

Unconventional Economist

Leith van Onselen is Chief Economist at the MB Fund and MB Super. Leith is an economist and has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.

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Comments

  1. Uber is not sustainable.

    It will become expensive and unreliable and their competitive advantage will wane.

    As it becomes less popular, the government will start cracking down on its questionable business practices and as such, will continue to become less reliable and cheap.

    In the interim, taxi companies will come together and form an Uber-like platform, where rides are put out on the platform and available taxis from various companies compete for the fare – in turn making taxis more affordable and reliable, and therefore a viable option again against Uber.

    • Uber will get expensive because of the debt burden they have of breaking regulatory barriers and creating market share.

      Their competitors don’t have that problem.

    • Already happening. At certain times UBER its more expensive than a taxi and harder to get. As a consumer its great as I have options and it keeps both industries evolving and honest. Its worth pointing out that the worst case for me is that UBER will dominate and become a monopoly.

    • DominicMEMBER

      Uber’s business model is to survive long enough to bury all the competition, after which it will have to jack up rates to become profitable — however, this strategy is only sustainable as long as equity investors keep ploughing funds into this cash-burning monster. If/when investors lose patience Uber’s moment of truth will arrive.

    • I suspect taxi’s are not sustainable in their present form whereby someone owns the plates and expects dogsbody drivers to take less than uber wages to run the taxi for 12 hour shifts 6 days a week. Many of these drivers have moved over to uber themselves. Given time I would guess they will just be opposing equals.

  2. If Uber succeeds and dominates the market and kills off taxi’s, that will simply mean they will be able to set the price (since they will be the Monopoly player). However that will only work until another competitor app comes along to disrupt them.

  3. Oh and I personally know someone who worked for Uber a few years ago, she quit due to stress and was not happy with their lack of ethics and she was not the kind of person I’d hold in high regard in terms of ethics… go figure.

    • boomengineeringMEMBER

      Shared sons Uber on Sat, on the way back took taxi with missus. Indian driver said very quite, we gave the usual 25% tip and he remembered us from last time. Don’t know how much the Uber was but feel more comfortable in the taxi though.

    • Look at dem lubly yorgas

      Probably why uber driving is so popular with indians. Unlike taxis at least the uber rating system forces them to take a shower every now and again

  4. Ronin8317MEMBER

    If the number of taxi license is not capped, Uber would not even exists. Similarly, Australia can legislate Uber out of existence by adopting forcing the driver to get a hire car permit that is impossible to obtain, like in HK.

    • DominicMEMBER

      We don’t need that Ronin. Government’s creating and maintaining monopolies is not good for the consumer — whatever you think of Uber it has made taxis much more affordable, cleaner and the drivers much more polite.

    • Government won’t do that. The need Uber to proper up the employment market for all the New Australians. Same with Uber Eats et al.

  5. Uber take a 27.5% clip, of which most ends up overseas with little tax payable. If that clip was going to the driver or an Aussie business atleast the profits would be spent here.
    Uber should be shut down. The Tech exists here in Australia and if it was fully an Australian company it would be paying the company tax rate.
    Governments etc who support these companies need s hole in the head, as what value add does it really offer the Australian economy?

    • A significant portion of your taxi fare goes to very wealthy individuals who have been extracting maximum profit from the Australian public. I don’t feel sorry for them, one little bit.

      • Fair call, my issue is more with Uber’s little tax payable, and big clip, given they do fk all let’s face it.
        What we need is an Aussie Uber, who charges say a 15% clip, so these poor drivers can do a little better?
        GoCatch has been around longer than Uber and is Aussie, yet just doesn’t get the coverage Uber etc get? And is Aussie

    • DominicMEMBER

      Uber are hopelessly unprofitable at the mo. It will be years before the tax man is remotely interested.

      Personally, I can’t work it out given that their overheads can’t be that great ,but there you go.

      • Uber made a A$4.4 million profit in Australia in 2017 while its parent company made a record loss of US$6 billion in 2017.

      • DominicMEMBER

        Easily arranged, Jacob. I think it’s known as tax ‘mitigation’. They all do it.

      • Bllsht, check out their prospects, they had rev in Australia last year of around 1 bill, paid f kall in tax. Very profitable here.
        Uber eats is another separate company as l understand, again likely set up that way to….reduce tax

    • DominicMEMBER

      I have a little secret for you. Strayan companies do what Uber does i.e. tax mitigation. Wealthy individuals do it too – all the time. In fact, you could count the number of local wealthy who DON’T have a tax mitigation strategy on the fingers of one hand.

      It’s the same here as it is everywhere else: the people who pay all the taxes are the middle income workers whose taxes get paid at source.

    • DominicMEMBER

      There are several competitors way ahead of Tesla in the driverless car race

      • Waymo is leading the pack and:

        Waymo CEO: ‘Level 5’ fully-autonomous vehicles will never exist

        Driverless cars were supposed to be here in 2017 and they are actually decades away – if ever.

        The paperless office was supposed to be here in 1980.

        Nuclear fusion has been “just around the corner” for decades.

      • Women who can play soccer well has supposedly already happened, if you hear how much they want to get paid. Funny stuff. Just ask Andy Gray.

  6. run to the hillsMEMBER

    Good riddance to taxis which are probably the worst run service industry in Australia. As their fares dwindle the desperation of taxi drivers is now on full display, one example being after recent Swans games at the SCG. It used to be quite difficult to flag down a cab on Moore Park road after matches, however the Saturday before last the taxis were lined up in droves after the match, with lights on as available. However as I discovered to my dismay and incredible annoyance, before you could sit down the drivers would ask where I wanted to go, which was North Sydney, normally a $35 fare, and I was quoted a $70 flat fare by three drivers in a row before I stormed off in a rage. All the cabbies were of South Asian appearance and obviously in cahoots with an agreed set of rates. This has been going on all season and I know it disgusts the long time cabbies who are trying to save their livelihood.

    • I didn’t know they could do this? Happens to my kids, guy said road was buy so ride would cost double, they knew no different. I complained but as he was only a part time driver they could do zero about it? Feels like everywhere you turned you are being f ked nowadays