APAC Ride-Hailing Apps Get Supercharged

It's no surprise that with the surging popularity of ride-hailing in recent years, the market continues to flourish. Meanwhile, increased urbanization and lack of affordability has led to the steady decline of the traditional passenger car market. However, despite nearly 22 billion trips completed in 2018 and 28 billion expected by the end of this year, ride-hailing vendors are experiencing unprecedented losses. Uber reported a net loss of $1.1 billion in the first quarter of 2019, even in the wake of increased earnings and usage — an alarming number that begs the question of long-term sustainability for this market in its current state.

Introducing the Super App

In order to sustain profitability, it won't be enough for vendors to cut costs and look for increased market share in the ride-hailing sector. Vendors will need to develop an on-demand mentality beyond ride-hailing. This is where the super app comes in — a collection of services designed as a one-stop shop for consumers. The most prominent current example domestically is Uber Eats, which has been a saving grace for the parent app with regard to revenue, but only in the food delivery universe. The Asia-Pacific region, home to the world's largest ride-hailing market, has seen two vendors — Grab and Gojek — recently develop super apps, providing numerous on-demand services to their customers. While Uber Eats is well established under its current niche, Grab and Gojek have set up deilvery services for food, mail, and even prescriptions. This versatility has helped propel much of their success in APAC. 

Creating Opportunities Beyond Ride-Hailing

Grab's ride-hailing market share continues to flourish, and there are no plans to decrease its market share in support of the super app platform. Particularly in Vietnam and Indonesia, where current market shares sit at 73% and 64% respectively, Grab expects to continue playing a significant role in the super app strategy. With Indonesia solely accounting for 40% of Southeast Asia's GDP, Grab is realizing the opportunity to generate larger revenue streams beyond ride-hailing with offerings such as GrabExpress, GrabFood, GrabFresh, GrabPay, and GrabFinancial. 

Gojek, with a current 5% market share in the ride-hailing sector, has considerably stepped up its strategic entrance into the super app business, and has done well in its direct competition with Grab. Despite ride-hailing representing less than 25% of its overall gross merchandise value, its offerings — Go-Pay, Go-Mart, and GoClean, among others — have subsidized its growth. 

As long as the ride-hailing sectors of these companies continue operating at a loss, raising customer fares and attempts to gain additional market share will not be enough to sustain continuous growth. Although the success of Uber Eats is not to be mitigated, it's Grab and Gojek that are the companies pioneering the super app model. Similar companies, including Uber, will need to explore becoming a universal platform for smart mobility on-demand services. 

Get Additional Smart Mobility & Automotive Coverage

Our corresponding report on Vehicle and Mobility Market Data provides related information on several additional ride-hailing companies and services, including current market shares,  forecasted adoption of ride services, and related revenues. The Smart Mobility & Automotive research service coverage provides answers to your most pressing questions around the industry.