Ride-hailing battle: Rapido gains users and market share driven by bike-taxi operations; surpasses Uber and Ola

Rapido has emerged as India's leading ride-hailing service, commanding nearly half the market share, surpassing both Uber and Ola, despite its initial perception as a specialised bike-taxi service.The company's significant market share stems primarily from its two-wheeler taxi operations, affecting Ola's business substantially. Additionally, Uber is experiencing mounting pressure in one of its crucial markets.Data from Sensor Tower, referenced in a Citi Research report, shows that Rapido overtook Uber in monthly active users (MAUs) on Android in January 2024, as reported by Economic Times. By July, Rapido recorded approximately 50 million MAUs compared to Uber's 30 million.

This difference is significant in an Android-dominated market.The Bengaluru-based company has established supremacy in bike taxis, which typically generate higher volumes. It has also secured nearly 30% of the four-wheeler cab sector. Uber maintains 50% of the online four-wheeler cab market, with Ola holding the remainder.This context explains why Uber CEO Dara Khosrowshahi recently acknowledged Rapido as the "tougher competition" compared to Ola in India.

Uber's response to its competitor's expansion includes traditional price reduction strategies. ET sources indicated that in Bengaluru, Gurugram and certain Mumbai areas where Rapido has shown substantial growth, Uber has reduced fares by 20-25%.Additionally, Uber has adopted Rapido's approach by introducing a subscription model for drivers.Drivers now have the option to pay a fixed daily fee between Rs 120 and Rs 140 for unlimited platform access over 24 hours, rather than paying per-ride commission.

During this period, Uber only deducts 5% goods and services tax."In India, Uber has often been more reactive than proactive over the last few years. Its recent fare cuts and driver incentives are responses to Rapido's rise…not fresh innovations that can shape the market," said an investor with exposure to the sector. "Rapido may be bleeding cash, but it is winning mindshare…and that can be harder to reclaim than market share."However, Rapido cofounder and CEO Aravind Sanka told ET that the company will focus more on "sustainable growth" than "chasing market leadership at any cost". "The continued (user) engagement has strengthened our leadership across bike, auto and parcel services, built not on subsidies or price wars but on a captain-first and customer-focused approach. As we now expand into cabs, our priority is to scale responsibly by enhancing driver earnings, improving service quality and ensuring reliable, affordable mobility for all," Sanka said.The captain reference is Rapido's strategy of designating its driver partners as "captains".Reports indicate Rapido's monthly cash expenditure reached $4-5 million (Rs 40-45 crore) in early 2025, increasing significantly after previous cost-reduction efforts. The company's losses decreased to Rs 17 crore in July-September 2024, compared to Rs 74 crore in the same period the previous year.Regarding the driver subscription model, an Uber spokesperson said,"We are scaling different versions of subscription models across all modes, including cars, bikes, and autos, and will keep iterating to ensure drivers are maximising returns for the time spent on the platform.

This approach also helps ensure a level playing field as the GST treatment on this model remains unresolved."Some companies in the ride-hailing sector maintain they shouldn't be responsible for GST collection from drivers using the subscription model.Addressing fare reductions, the Uber spokesperson said, "While price tweaks are part of our dynamic pricing strategy, our fares have been fairly consistent for the last many quarters.

We operate in a seasonal, highly variable business where adjustments are made routinely to optimise rider engagement, reduce wait times, and ensure driver availability."The defensive strategyUber's dual approach of reducing passenger fares whilst offering drivers more flexible terms represents a strategic change in India, where the focus had been on enhancing customer experience rather than competing on price."A few years ago, we doubled down on our focus to improve customer experience after issues like driver cancellations and poor service quality started hurting us. We rolled out premium services like Uber Black, launched Uber One as a loyalty programme, introduced safety features and improved ride transparency," an Uber executive said on the condition of anonymity. "But Rapido's rise has changed the playbook…we are now fighting on both supply and demand.

"The executive noted how companies like BluSmart highlighted declining service standards at Uber. The all-electric fleet service gained popularity among business travellers for reliable service, highlighting issues with both Ola and Uber. However, BluSmart ceased operations due to financial difficulties when founder Anmol Singh Jaggi faced regulatory investigations regarding corporate governance.Internal reports show Uber's urgency through reliability targets.

A company employee revealed that teams must ensure 60% of booked rides are completed, meaning fewer than four cancellations per ten bookings. "Right now, reliability hovers around 50-55%," the employee said. "The target is 60%, and there has been strong internal pressure to get there."The Uber spokesperson responded: "These numbers that you have cited are highly misleading or plain wrong."Uber's global parent company provides significant support.

The profitable San Francisco-based organisation enables Uber India to sustain fare reductions and driver incentives without immediate profit concerns. Unlike Rapido's customer acquisition costs, Uber's Indian operations maintain better unit economics, as reported by ET.Uber's commission rate of 30-35% from drivers results in a net take rate approximately 6-7 percentage points above Rapido's, indicating lower per-ride revenue for the Indian company.

"Uber has the headroom to fight this battle, while Rapido is bleeding," according to one source.Nevertheless, Rapido recently secured over $200 million from investors including WestBridge Capital, Nexus Venture Partners and Prosus. Currently, discussions with Prosus continue regarding an additional $300 million in primary capital at a $2.7 billion valuation.The situation becomes more complex considering Rapido's expansion plans.

After establishing its position in urban transport, it's entering food delivery, currently dominated by Zomato-Swiggy, a market Uber previously attempted unsuccessfully.Uber Eats was acquired by Zomato (now Eternal) in 2020 following mounting losses and limited growth prospects, as Khosrowshahi streamlined operations after becoming CEO.Rapido's simultaneous expansion into mobility and food delivery, whilst managing cash burn and unit economics, might prove overwhelming. This ironic parallel wouldn't be lost on Khosrowshahi, who witnessed Uber's food delivery exit in India.