CHICAGO, Oct. 04, 2019 (GLOBE NEWSWIRE) -- The Ride Sharing Market is projected to grow at a CAGR of 19.87% from 2018 to 2025, to reach a market size of USD 218.0 billion by 2025 from USD 61.3 billion in 2018.
INCREASING USER BASE AMONG MILLENNIALS AND POTENTIAL GENERATION Z
The increasing popularity of ride sharing among millennials and generation Z offers a lucrative opportunity for ride sharing market. Millennials are people who have reached adulthood in the early 21st century and were born in the 1980s, 1990s, or early 2000s. While generation Z refers to people born in the mid-1990s to mid-2000s. This generation is tech-savvy and has greater accessibility to smartphones and the internet. As a result, they have easy access to app-based ride sharing mobility services. According to the US government statistics in 2015, 77% of the people in the age group of 12–17 years in the US owned smartphones, which substantially showcases the target market for ride sharing service providers. In addition, today’s younger generation understands the benefits of ride sharing and would continue to use these services even when they grow old. An average millennial will spend USD 323,190 on ride sharing over the next 25 years.
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PROFITABILITY AND SUSTAINABILITY MODEL
One of the biggest challenges for the ride sharing market is the issue of profitability and developing a sustainable business model.
The intensity of competitive rivalry among taxi aggregators in the ride sharing market is high. As a result, ride sharing providers are grabbing each other’s market share. The ride sharing market comprises established players such as Uber, Didi, and Lyft among others. The nature of the existing business environment is an oligopolistic market structure. However, the increasing number of new entrants in this high growth market is making it more competitive. The growth rate of ride sharing is high, but the low loyalty adherence of drivers and passengers is a cause of concern for the market players. The driver’s share in the ride cost is very high. Still, the drivers continue to demand more share in the ride cost. If the ride sharing companies agree to pay more, the companies will see more losses. Drivers work with multiple platforms for earnings, while passengers tend to use multiple mobility service providers. Capital requirement in ride sharing market is high owing to driver pay-outs, marketing cost, and ride subsidies for new customer acquisition and retention. Additionally, global expansion requires both subsidizing rides and competitive pricing to tackle competitors. This has resulted in huge losses for the market players. For instance, Uber suffered losses worth USD 4.5 billion in 2017 globally.
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The current ride sharing market is dominated by established players such as Uber, Ola, Didi, and Lyft. The key market players such as Didi have gained a substantial market share by focusing on high-growth markets such as China. On the other hand, Uber, after selling its China operations to Didi, is focusing on fast-growing taxi markets such as India. The ride sharing industry has low entry barriers. New entrants can offer more subsidies and customers have no switching cost. These factors make it difficult for ride sharing companies to develop a proper sustainable model. Hence, it will be difficult for ride sharing service providers to sustain in the market without a sustainable business model, which could improve their profitability.
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