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Why ComfortDelGro's Uber deal is timely
Its fleet has been shrinking due to private hire car firms.
Amidst the elevated competition from private hire car firms, ComfortDelGro's recent Uber deal could not have come at a better time.
According to RHB analyst Shekhar Jaiswal, ComfortDelGro is expected to benefit from an improved taxi utilisation from the deal.
To recall, ComfortDelGro's taxi revenue already fell 11% to $36m YoY in 2Q17. Its Singapore taxi fleet shrunk to 15,556 units as at end-June, from 16,821 as at end-2016.
More so, its idle-rate increased to 5.0% from 3.5% in 1Q17.
ComfortDelGro’s competitors in the taxi industry are already collaborating with Grab, and it has struggled to improve its booking system to match the competition from Grab.
"We believe the partnership with Uber could alleviate the weakness in its taxi business through an improvement in its utilisation rate – thereby arresting the decline in fleet size," the analyst said.
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