Partnering with Ola, Uber requires hard look at costs

If you hire a driver and buy the car on EMIs, the monthly income isn't so attractive

When Mumbai-based businessman Sanjay Kadam was looking for some additional income, his wife suggested becoming a partner with a cab aggregator like Ola or Uber. It would not involve much investment. A friend whose car was fully equipped with features, according to the aggregators’ requirements, was willing to let Kadam use it. He also knew a driver who was willing to work in the night shift.
 

According to the Uber spokesperson in such kind of partnerships, the risks are minimised because the entrepreneurs can begin earning steady income as soon as they start. “The advantages include an opportunity for drivers to have their own custom-tailored working hours and their own earning targets. The driver partner incurs standard expenses around owning and maintaining his car,’’ the spokesperson says.
 
As part of his research, Kadam, attended meetings for partners held by both operators . He spoke to people who own the vehicle and appoint drivers, as well as those who are driver-cum-owners. After much consideration and discussion with his financial advisor, Kadam has dropped the plan for the time being.
 
He says, “I calculated I could earn about Rs 10,000-12,000 per month, after deducting costs like maintenance, parking charges, driver’s salary, etc. If I did not have a driver, my earning would have been Rs 45,000 per month. I would have asked for Rs 3,000 per day jointly from both drivers and I would pay for the fuel and maintenance. The driver would have still made Rs 1,000-2,000 per day.”
 
But the projected earning is possible only if the vehicle actually runs 24 hours. This would require a driver each for the day and night shifts. It would also require the driver to work without any offdays. It would require commitment on part of the owner/driver to ensure the vehicle is always in good condition, and so on. Since it is a commercial vehicle, the driver needs a commercial license.
 
“Becoming a partner with a cab aggregator makes sense only if the owner is also driving the car,” says Deepali Sen, founder, Srujan Financial Advisors, who is Kadam’s advisor. “When the driver is not the owner, his commitment is less. There could be absenteeism. If the vehicle breaks down, the owner may have to rush to the spot. I also factored in an Equated Monthly Installment (EMI) in case Kadam took a loan for the car. This would make his earnings Rs 10,000-15,000 per month after all deductions. But the tension and mental worry one has to undergo is not worth the trouble. If you have a job or business, then you will not be able to devote much time to it,’’ she says.
 
Kadam aborted his plans based on the projected calculations after his discussions with the cab aggregators and others like Anil Mhatre (name changed due to his ongoing agreement with Ola). Mhatre, who became a partner in 2015, is ruing the decision. He bought a vehicle after taking a loan of Rs 4.5 lakh and appointed a driver. While initially, the driver was able to do 10-15 trips in 12 hours,  these days he is able to do only five to six trips. “Due to the increase in the number of vehicles today, it is difficult to get trips,’’ he says. In fact, for the past couple of months, his vehicle has hardly got trips but he is paying his driver a salary of Rs 8,000. He is also paying Rs 15,900 as EMI on the car loan.
 
“After the EMI, maintenance, fuel charges, insurance, etc, my earning is Rs 5,000-8,000. It is not worth the trouble. Now I feel that investing in a bank fixed deposit or shares will give me better returns. It is also not easy to get a driver because of the high demand,’’ he says.