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Ride Sharing: Competition in Latin America & Asia Pacific Heats Up (Uber, Didi, Ola, Grab, GoJek)

Uber reported a disappointing Q2 2019 results earlier this month, and its Q3 results may not be that positive either. Our analysis of download rankings around the world suggest that Didi & Ola are growing very rapidly in Uber's territories. The global ride sharing industry is becoming a battle amongst giants that Softbank created.

Uber reported a disappointing Q2 2019 results earlier this month. While the company management didn't highlight competitive pressures as a driving factor for the quarter, publicly available data suggests otherwise: competition is indeed heating up again in many of Uber's growth markets like Latin America and Asia Pacific. More concerningly, as we highlighted in May, the source of competition is Uber's regional rivals that are large, well funded and were previously perceived to have a sort of an "alliance" with Uber. The global ride sharing industry is becoming a battle amongst giants that Softbank created.

Ola Is Now Beating Uber in Australia and New Zealand

Ola, the leading ride-sharing app in India and Uber's chief competitor in the country, began expanding into other markets in 2018. While its progress has been somewhat slow, limiting its operations to Australia, New Zealand and the UK, the slow approach may be working well for the company. In fact, Ola recently overtook Uber as the top travel app on the Apple Appstore in Australia and New Zealand. For example, Ola consistently trailed Uber in Australia until August, when it has been averaging a download ranking of 1.73 (as of August 26th) vs Uber's 2.85. One unifying characteristic of these markets is that they are known to be popular destination for Indian immigrants. While Ola's ramp in the UK has been comparatively slower, there's no telling how aggressive and successful Ola can be in this market down the road given its success in the other 2 locations. Perhaps this datapoint adds more context to the apparent conflict Ola has been having with Softbank earlier this year.

Daily Average Download Ranking (Apple App Store, Travel Category)

August 1-26UberOla
India2.01.0
Australia2.91.7
New Zealand2.21.2
United Kingdom1.433.9

With its local competitor Dida slowing down, Didi Is Successfully Expanding into Japan and Latin America

In the meantime, Didi—the leading ride-sharing app in China and also an "investee" of Uber since its acquisition of Uber's mainland China business in 2016—has been busy growing its international businesses. Especially now that its domestic challenger Dida has dramatically slowed down its growth, Didi might be even better prepared for international expansion.

Didi in China finally regained its lead against its local rival Dida starting in April

For example, it has been consistently hot on Uber's tail in Mexico with its English app and in Brazil, where it acquired one of the local leaders called 99Taxi. To Uber's peril, Didi seems to be gaining more confidence in the Latin American market after these 2 success cases. In fact, it is now the most downloaded travel app in Colombia and Chile ahead of Uber. Uber's CEO Dara Khosrowshashi touted Argentina as a "very strong market" for Uber in the company's Q2 earnings call. While Didi is yet to enter this market successful, its successful expansion into other Latin American countries suggests that there is more competitive pressure to come for Uber.

Daily Average Download Ranking (Apple App Store, Travel Category)

August 1-22UberDidi (including subsidiaries)
Mexico1.02.0
Brazil1.11.9
Colombia4.11.2
Chile2.41.0
*as of August 25

A bigger source of concern for Uber could be Didi's success in Japan. While Uber is planning to grow in Japan as an "Eats first and then rides second business," Didi suddenly began ranking as the most downloaded travel app in the country, leaving Uber in the dust. Notably, Didi actually formed a joint venture with Softbank to enter Japan last August. Now that Didi has a local ally with whom its growing a solid business already, investors may have to write off the world's 3rd biggest economy as a potential Uber territory.

Didi suddenly became the #1 travel app in Japan, leaving Uber in the dust

More Potential "Frenemies" Brewing in SE Asia

After its acquisition of Uber's SE Asia business, Grab has not made any plans to enter Uber's remaining markets in the region, namely Hong Kong and Taiwan. And, understandably so. Uber holds a significant equity stake in Grab, and the 2 firms share a significant shareholder in Softbank. However, that both Ola and Didi are now encroaching onto Uber's territory begs another interesting question: will Grab ever compete against Uber? Afterall, they are all Softbank investees that either once competed or is competing against Uber in a major market. We saw how large amounts of funding and competitive local dynamics have pushed both Didi and Ola out of their home markets in search of growth. As a matter of fact, Grab has been engaged in a knife-fight against GoJek in all of its major SE Asian markets, which doesn't have an end in sight due to the fact that GoJek also has humongous backers like Tencent and Google.

Daily Average Download Ranking (Apple App Store, Travel Category)

August 1-22GrabGoJek
Singapore1.02.1
Indonesia1.02.1
Vietnam1.02.0
Thailand^9.020.4
*as of August 25; ^Overall Ranking

Now that GoJek has established a strong foothold in Grab's territory, it would be unwise to rule out the possibility that either GoJek or Grab (or both) will let Uber operate alone in markets like Hong Kong and Taiwan. In fact, Grab has been downloaded more than Uber in Hong Kong this entire summer despite the fact that Grab doesn't operate in the market, indicating a very high level of brand affinity from the locals. If and when they do, they have a good chance of overthrowing Uber's local dominance. Competition in the global ride-sharing industry is far from over.

Grab has been getting more downloads than Uber in Hong Kong since April, despite the fact that Grab doesn't even operate in the region

More Competition & Acquisition Ahead

The global ride-sharing industry seems to be becoming a battle among Softbank investees. Softbank indeed invested in all of these companies, and subsequently encouraged them to rationalize their territories and even merge in some cases (though Ola has not struck any deal with Uber to date). However, they are now successfully encroaching on Uber's territory, resparking the competitive atmosphere that were previously assumed to have been over, and doing so by using the money they got from Softbank. Somehow, the thesis that having a common major investor would pacify their competitive stance seems to be breaking down. Competition in the global ride-sharing industry is far from over.

Furthermore, competition will now go beyond just operating and providing discounts in certain markets. As we saw earlier this year, ride-sharing companies will continue to acquire smaller, local competitors either to compete against their bigger rivals or to prevent them from securing a legitimate foothold in their territories. For example, Uber already acquired Careem in March to secure its dominance over the Middle East. Didi also acquired 99 in January to establish a strong presence in Brazil against the market leader Uber. There are still more potential acquisition targets that are likely to be targeted because of their strong foothold in certain key markets, especially in Latin America, Africa, Europe and Korea. We list some of them below.

CompanyKey Markets
CabifySpanish speaking countries like Spain, Argentina, Chile, Peru, etc.
FREE NOW Group (Beat)Latin America (Mexico, Colombia, Chile, Peru, etc.)
inDriverLatin America (Colombia, Peru, El Savador, etc.), Africa (South Africa, Kenya, Nigeria, etc.) parts of Eastern Europe (Kyrgystan, Uzbekistan, Armenia, etc.)
BoltParts of Africa and Europe (Portugal, Ghana, South Africa, Nigeria, etc.)
Tada & SocarKorea
Duckju Kang

Duckju is the CEO of ValueChampion. He covers the financial services industry, consumer finance products, budgeting, and investing. He previously worked in the financial services industry, including at such hedge funds such as Tiger Asia and Cadian Capital.

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