to be named low-cost product which will have cars manufactured as early as 2008.
To make it worse Uber has a bribe-sort incentive of Ksh 3000 to encourage users to sign up day and night so that it hits its target number fast. These will mean Uber will have more cars on the road, and with some network effect, more passengers and a liquid bank account. These move will weaken Uber’s own UberX and have a disastrous effect on Little, Taxify, Mondo, Dandia among others. With the dead of UberX, all cabs on the road will be UberK (UberKenya) due to its friendly price for passengers and many trips for the driver-partners.
The firm announced in a statement, “We are launching a new, low cost product in Nairobi. The new product is designed to be cheaper for riders and more affordable for partners. This will be a new, separate product and is not the same as the uberX product that we currently have. Both products will exist side by side. Each product will have a different price and different requirements.”
Uber added that it will now only accept cars to sign up for the low cost product only and is not accepting cars for uberX at the moment. The firm is offering KES 3,000 as an incentive for a limited time only after the car takes 20 trips on the new product alone. The only problem is that existing uberX partners can have cars on both products.
Though ALL types of cars are welcome to join Uber’s low cost product, the firm is recommending low cost, fuel efficient cars for example Toyota Vitz with 800 – 1200 CC car models, an NTSA inspection and sticker, PSV insurance and copy of logbook for the car while for the driver-partners a National ID, PSV License, a regular Driving License and a background check through one of its recommended vendors.
Why is Uber doing this?
One factor which economists say is the biggest is for Uber to disrupt itself and outdo its competition. With new prices, UberX failed to compete as it was the most expensive service compared to Safaricom-backed Little, Taxify and Mondo. With Uber drivers charging through the roof getting passengers was harder and time wasting not because of competition but UberX had so many drivers and it was charging exorbitantly. These made the whole thing unprofitable.
Another driver-partner who asked for anonymity said there was no significant difference in revenues after a recent price hike claiming Uber driver-partners are struggling to make ends meet and the firm is losing more cars to the competition hence the low cost option is a win-win and makes a lot of sense. He added that the timing is perfect to help the firm and its driver-partners to earn a return on their investments.
The move by Uber to lower its standards to accommodate more cars on the new low-cost service will take Uber back to where it used to be in terms of traffic after its 35 percent price cut. and even at a better position in terms of revenues, traffic and driver-partner satisfaction. Uber has an exact number of cars it’s looking for and when it hits that number on the road, it will close both programs and let price drive traffic to its new low-cost service until every one in Kenya is taking an UberK or whatever they will call it.