SMRT Partners Grab, Taxi drivers urged to rent cheaper vehicles

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SMRT partners Grab in private-hire car venture

BY
KENNETH CHENG
[email protected]ISHED: 11:23 AM, APRIL 18, 2016UPDATED: 12:17 PM, APRIL 19, 2016
SINGAPORE — With the taxi industry hit by the proliferation of private-hire car services, transport operator SMRT wants a piece of the pie — by joining hands with competitor-turned-partner GrabCar in its foray into the industry.

Launched on Monday (April 18), SMRT’s private-hire car business is parked under Strides Transportation, a wholly-owned subsidiary of its taxis arm, SMRT Taxis. The firm’s fleet of 300 sedans, set to be rolled out progressively over the next six months, will offer chauffeured and car-rental services.

The first such vehicles are expected to hit the roads on Monday next week. Strides is also targeting the commercial and upmarket segments with limousine services. Almost 30 such vehicles are already plying the streets. Customers can book Strides’ services via a customer hotline or through app-based ride-booking platforms such as Grab.

Currently, Strides has about “30 to 50” drivers and will ramp up recruitment, said Mr Benny Lim, managing director of SMRT Roads. The transport operator has also dangled incentives for SMRT taxi drivers looking to make the switch to private-hire vehicles, with Mr Lim saying they would be able to carry over the loyalty bonuses they have been getting from SMRT Taxis if they cross over.

Strides’ one-year partnership with Grab will also allow up to 200 drivers to take bookings exclusively via the Grab app and receive additional cash incentives from the app-based ride-booking platform if they meet its performance targets.

Renting a Toyota Altis sedan from Strides costs S$79 a day, before a S$5 performance-related rebate. In comparison, a taxi driver has to pay S$125 a day renting a Toyota Prius taxi from SMRT, for example.

On whether SMRT’s taxi business could be cannibalised, Mr Lim said: “Private-hire car services are also in demand now. So to us ... it’s actually a natural progression for SMRT Taxis to offer (such) services. So it actually complements what we’ve been offering in terms of taxi services.”

Transport expert Walter Theseira noted that SMRT was entering the business as a vehicle provider, rather than going head-on with Grab or Uber, which offer app-based ride-hailing services. As such, the latest development did not represent a “huge change” to the business landscape, he said.

“The real disruption has come from the increasing market penetration and utilisation of the apps, rather than the physical provision of the vehicle fleet used for private-hire driving,” said Dr Theseira, a senior lecturer at SIM University.

With more drivers expected to join the private-hire sector, SIM University adjunct associate professor Park Byung Joon said it “makes sense” for SMRT to venture into the business to maintain its market share. “Instead of doing nothing … they should be getting into the market that they know will eventually, not totally, replace (or) at least substitute a certain percentage of their taxi fleet,” Dr Park said.

Still, with the market in a state of flux, there may be a “tug of war” between taxi and private-hire services, Dr Park said. Drivers, too, will also be “caught in the middle”, not knowing “which side to be on”, he added.

In early 2014, Prime Taxi was the first taxi firm to venture into the private-car hire business. It has 300 private limousine cars in its fleet, with the number set to rise to more than 500 by the end of this year, said Prime Group chairman Neo Nam Heng. Mr Neo believed taxi and private-hire drivers can “co-exist”, with the latter easing the commuter demand for taxis during peak hours. He cited being allowed to take street hails and the range of surcharges — such as the peak-hour surcharge — tagged onto taxi fares as among the reasons why some continue to prefer driving regular taxis.

Mr Wong Wee Yek, 73, a cab driver of 22 years, said that while private-hire vehicles have hurt his earnings, he would not consider taking up a private-hire car. He preferred the structured and reputed environment that driving with a “big company” affords. Noting that switching to private hiring may not necessarily mean higher earnings, Mr Wong, who drives a Comfort cab, said: “How much you earn depends on how hard you work.”

Mr Harry Ng, 57, who drives a Comfort limousine cab, said that 70 per cent of his earnings come from street hails. He has never considered making the switch as he can pick up street hails and has regular customers, he added.

However, CityCab driver Wong Wing Soon, 46, said he would look into switching to a private-hire vehicle, as the rental costs are lower.

“My major consideration is money ... whether I can make that amount in fewer hours,” he said.


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