No rate hike for Grab after merger with Uber

Company will not increase its rates as it would dissuade users from using the platform, says CEO


Ride-sharing giant Grab, while expecting a sharp supply and demand spike for its services following its take-over of Uber Technologies Inc’s Pic  operations, will still continue with its competitive pricing mode.

Grab Malaysia country head Sean Goh said despite effectively gaining control of the market, the company will not increase its rates as it would dissuade users from using the platform, and thus bring down demand.

“If enough consumers get put off from ride-hailing, it will eventually be damaging for drivers as well,” he said, adding that fares will remain market-driven and competitive.

Uber confirmed this week that it will be selling its regional business to homegrown player Grab in an exchange for a 27.5% stake in the latter.

This will see Grab taking control over Uber’s operations and assets spread across some 50 cities in Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

There are some 300,000 registered e-hailing drivers in Malaysia at present, the bulk of which are providing their services via Grab and Uber.

Goh said the merger is expected to result in higher density in the market, which will create greater demand for ride-sharing services, while fuelling higher driver productivity.

“With a higher number of cars in the road, coupled with a proportionate increase in demand in terms of bookings, we expect to see better availability for our passengers, which will lead to better productivity for our drivers,” he told reporters in a briefing at the company’s headquarters in Petaling Jaya.

He said the spike in supply will not necessarily be in terms of the number of drivers, but the amount of time drivers spend on the road providing their services.

The merger between the two companies will not only consolidate Grab’s position as the leading e-hailing provider in Malaysia, but South-East Asia as a whole, with the former already commanding 95% of all third-party taxi-hailing apps in the region.

Upon completion of the merger, Grab will assume control over Uber’s ride-sharing and food delivery businesses in South-East Asia, with the Uber ride-sharing app to be terminated on April 8 this year, while Uber Eats will run till the end of May of the same year before moving to the GrabFood platform.

GrabFood is slated for a May launch in Malaysia this year with the Uber Eats app going offline in the same month.

Grab’s food delivery service is currently operating in Indonesia and Thailand, and is looking to build on the Uber Eats platform to enter the Malaysian and Singaporean markets.

Goh said the exercise also allows Grab to learn from Uber in terms of technology and operations, but noted that the company has no immediate plans to change its user experience and approach with drivers.

“We are engaging our Uber counterparts on their existing in-house processes and are focused on making sure their drivers can get used to our systems, especially the key differences,” he said.

Ride-sharing drivers are allowed to continue to operate under the Uber platform until April 8, after which they can opt to sign on as a Grab driver.

Goh said Grab will continue to take a “hard stance” on its drivers with criminal offences to ensure the safety of passengers and drivers’ confidence in the platform.

“For us, crimes are ‘red lines’ and we will remove ex-convicts even after they’ve joined our platform,” Goh told The Malaysian Reserve, but added that it will consider civil offences on a case-by-case basis.

“It’s not discriminatory because we are thinking about the greater good of our community, both for the passengers and drivers.”

As part of the merger, Goh also said Uber passengers’ data will be shared while the data-using process is under careful supervision.

The privacy compliant organisation said they are adhering to laws such as the Personal Data Protection Act 2010.

Meanwhile, the merger could see some 500 Uber staff members in South-East Asia transitioning to Grab.

“We have started engaging with Uber’s Malaysian employees, but we cannot communicate directly with each individual until we get consent.

“There are existing functions that are needed for its growing operations but the understanding of interests, organisation needs and role-capability must be mutual (between both parties) without mandatory obligation,” Goh said.