Fleet Size: Lyft and Uber

Part
01
of one
Part
01

Fleet Size: Lyft and Uber

Despite facing challenges like offering low wages, Lyft and Uber are the two most popular ridesharing apps in the United States. Below is an overview of both companies' challenges, opportunities, and future plans in the U.S. market.

Lyft

Challenges

  • Lyft controls over one-third of the market in the United States, however it faces a number of challenges. Below are five of the challenges the ridesharing app deals with in the United States.
  • Lyft has been accused of not properly screening “driver’s criminal check and background.” Industry experts claim that the company should fingerprint potential drivers to identify the best candidates.
  • Rideshare operators like Lyft have been blamed for “not complying with the local regulations like other taxi operators have to,” which can lead to “an uneven playing field.” Local taxi drivers have filed lawsuits against Lyft, and have claimed that they have to maintain a commercial driving license and their vehicles are often inspected, “while rideshare drivers only have to meet age requirements, have a working car, and a regular license.”
  • Lyft doesn’t offer wheelchair-accessible vehicles, and have faced lawsuits that says Lyft violates the Americans with Disabilities Act. This act says taxi operators “need to provide wheelchair friendly services.”
  • Lyft has been accused of not paying their drivers enough, which has led to strikes where drivers demand a higher pay.

Opportunities

  • "In San Francisco, Lyft brought in 41 percent of January rideshare spending, making it the company’s strongest metro area by market share."
  • One of Lyft's strongest regions in the United States is the West Coast.
  • In the second quarter of 2019, Lyft reported $867 million in revenue. Seeing that it is in demand in the United States, Lyft will adjust prices on select routes across various “cities based on costs and demand elasticities.”
  • Lyft operates mainly in the United States and in 11 cities in Canada. Lyft said its business-to-business initiatives, such as organizations partnering with the company to provide "transportation for an employee, customer, patient or student" is "a $25 billion addressable opportunity."

Future Plans

  • Lyft's future plans include creating autonomous vehicles for the ridesharing industry.
  • Lyft plans to break into the health care industry and in January 2020, it partnered with "hospital operator CommonSpirit Health and a logistics company that manages emergency medical transportation" to grow its business in "transporting patients to and from health facilities."
  • Lyft plans to roll out driver centers in 2020, which provides "oil changes, tire rotations and battery replacements." It also allows drivers to "rent cars to use for Lyft or take a break between rides."

Uber

Challenges

  • One of Uber's challenges is that it has steep operating losses. Annually, "Uber is burning through cash to cover billion dollar losses," because it pays for riders discounts and driver payments to attract more drivers. This has led the company to lose more money than it has brought in.
  • Like Lyft, Uber is also accused of not paying their drivers enough, along with poor working conditions. After expenses, "the average take-home pay of an Uber driver in the United States" is $10. Uber has proposed a policy to ensure that drivers can earn a minimum of about $21 per hour as long as "a driver has a passenger in their car or is in route to pick someone up."
  • Uber faces a lot of competition not just in the United States, but across the globe as well. In November 2017, Uber CEO Dara Khosrowshahi said the United States has become unprofitable because of competition from Lyft.

Opportunities

  • In 2018, Uber dominated the rideshare market in the United States at 69 percent.
  • Uber completes 40 million rides per month in the United States.
  • The United States is an opportunity for Uber to make a profit because a third of Americans use rideshare services. Uber said that about "a quarter of its global ride-share bookings" come from five markets, three of which are in the United States (Los Angeles, New York City, and the San Francisco Bay Area).
  • As Uber’s presence grows across the United States, the company is finding more opportunities for business, such as Uber Eats, Uber Freight, and also Uber Works.
  • There's an opportunity for Uber in the United States because it is in demand by not just passengers, but drivers too. About nine out of 10 American drivers said "they use Uber to complement other sources of income," and "nearly a quarter of Uber driver partners were unemployed before they started driving with Uber."

Future Plans

  • Uber's long-term plans are to become the "Amazon of transportation" by eliminating private vehicle ownership, being the number one public transportation system, and launching Uber Air, which is a flying taxi.
  • In 2020, Uber plans to decrease spending and "improve profit margins in its taxi and food delivery businesses."
  • It will achieve this goal "by improving its algorithms for driver and rider incentives as well as for spending on online marketing." Additionally, it plans on improving its rate of "matching drivers and passengers to be more efficient with routing."
  • Uber plans to improve its ways of "'controlling costs' including continuing to exit the most unprofitable markets for Eats." It also wants to emphasize its services with Uber Comfort.
Sources
Sources