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Grab ramps up bid to dominate market

SINGAPORE — Fresh from raising US$2 billion (S$2.72 billion) to fuel its growth, Grab is ramping up efforts to dominate the ride-hailing market and grow its payments platform.

Head of Grab Singapore Lim Kell Jay. TODAY file photo

Head of Grab Singapore Lim Kell Jay. TODAY file photo

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SINGAPORE — Fresh from raising US$2 billion (S$2.72 billion) to fuel its growth, Grab is ramping up efforts to dominate the ride-hailing market and grow its payments platform.

In the next few weeks, the firm will be doubling the pool of vehicles on its fixed-fare JustGrab platform to more than 100,000 through its social ride-sharing service GrabHitch, Grab’s Singapore country head Lim Kell Jay told TODAY.

And by next month, its GrabPay platform will allow users to transfer credit to other users, paving the way for greater uptake of the payments platform that it ultimately hopes will be used in shopping and other transactions.

JustGrab consists of taxis and private-hire cars, while GrabHitch consists of private-car owners who offer lifts to commuters who make advance bookings at “not-for-profit” fees.

GrabHitch drivers do not require the Private Hire Car Driver’s Vocational Licence that private-hire car drivers must have.

Grab did not reveal the current size of its JustGrab pool, but said the number was over 50,000 when it was launched in March.

GrabHitch rides will be offered as a secondary option on JustGrab. This means passengers will be offered the GrabHitch option when all taxis or private-hire cars are taken and there is a suitable match. Riders will still pay GrabHitch fares, which are 20 per cent to 40 per cent lower than taxi fares, and the company said the arrangement is “within regulatory guidelines”.

GrabHitch rides, which now must be booked 15 minutes to seven days in advance, will become “on demand” when it is tagged to JustGrab. It will also be available as a secondary option on GrabTaxi and GrabCar.

Grab saw opportunities in pooling its services to build a “super-network of supply”, said Mr Lim.

More services will be brought together “in phases” and the ensuing “network effects” would mean passengers get a ride quicker and drivers spend significantly less time cruising empty. It also means “less price surge”, he said.

The pool of more than 100,000 vehicles would far surpass the traditional taxi fleet here, which stands at about 26,000. There are more than 42,800 private-hire cars here.

Transport experts who spoke to TODAY were mixed on the impact of Grab’s latest move.

Assistant Professor Terence Fan from the Singapore Management University said it will pile further pressure on taxi operators, which have to “redouble” their efforts.

Transport economist Walter Theseira, however, felt the impact would be limited, since GrabHitch drivers cannot do more than two trips a day to maintain their “non-commercial” status. The impact on taxi drivers during peak periods, when there is already excess demand, is expected to be minimal. “There’s more concern if GrabHitch supply is added during off-peak hours, when taxi drivers are experiencing a slowdown in fares,” said Dr Theseira.

Asked which times users are more likely to be matched with GrabHitch cars, the company said that several factors will come into play, including whether a GrabHitch driver is travelling in the same direction during that time.

GrabHitch driver Terence Teo, 38, noted the difficulty of landing same-day bookings in the afternoons. He hopes the move will “increase traffic” for drivers.

But fellow GrabHitch driver Sofhi Leong, 59, said the current stream of bookings is sufficient. Every route she puts up attracts about 20 matches, one or two of which are suitable, said Madam Leong.

Nevertheless, Dr Theseira said the move is a “strong competitive” one that would prompt reactions from competitors to preserve market share. “If Grab has the most volume, it brings the most value … because commuters get their rides the quickest and drivers want to use Grab because they get the most bookings”.

Asked about talk of Grab going public, Mr Lim would only say an initial public offering was “always an option” to raise money, but it was “not the only option”. The firm announced last month it had raised US$2 billion from Japan’s SoftBank Group and China’s top ride-hailing firm Didi Chuxing, and expects to raise another US$500 million. The firm will focus on transport and payments, as well as continue building its infrastructure and investing in talent.

In May, Grab completed a renovation of its largest driver centre in Sin Ming, increasing the space about five-fold into a facility of about 8,000 sq ft. The centre can now serve up to 1,000 drivers daily, up from 300 to 400 previously, Mr Lim said.

In April, Grab’s chief rival, Uber, disclosed that the company had more than a million active riders here, or one in five of Singapore’s population. Asked about its market share, Mr Lim said: “We’ve easily more than two times that user base.”

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