The taxi market is was valued at USD 159.6 billion in 2020, and it is estimated to reach USD 327.54 billion by 2026, at a rate of 8.95 % over the forecast period (2021-2026).
In 2020, the global taxi market experienced significant damage due to COVID-19, with lockdowns and restricted moments the demand for taxi. Increase risk associated with crowded places with social distancing measures have had a negative impact on the growth of the market as the preference of the customers has shifted towards personal vehicles. Yet, with ease in lockdown measures demand is returning back to the market and by the end of 2021, it is expected that the market experience growth.
In recent years passengersâ€™ preferences for utilizing taxi services and ride-sharing services across the developing countries, such as India, China, Vietnam, etc., have increased along with the increase in demand in the developed regions such as the United States and Europe. This has led the companies to enhance the options and expand their operations to be provided in mobile applications, to retain their respective market shares in a highly competitive market.
Asia-Pacific captured a major share of the market, accounting for 73.14% of the global taxi market, in 2020. Increasing traffic congestion and low taxi fare, when compared to other modes of transportation, are the major factors driving the growth of the motorcycle/bike taxi service in the Asia-Pacific market.
Key Market Trends
Rising Demand for Ride-Hailing and Ride-Sharing Services
The taxi industry has been one of the longest-running industries, contributing significantly to the worldâ€™s economy. However, the rising ride-hailing and taxi sharing demand are replacing the conventional taxi market.
Ride-hailing is anticipated to lead the taxi market over the forecast period. According to some surveys, a total of 15 million ride-hailing trips happen each day, which is expected to gigantically increase and hit a 100 million mark, by 2030.
Several ride hailing companies are raising funds from investors with an aim to improve their technology and provide better services to its customers. For instance,
- In December 2020, Estonian ride-hailing firm Bolt raised EUR 150 million (USD 182 million) in a funding round led by D1 Capital Partners. The company said it will use the money to develop driver face verification and use machine learning to prevent potential incidents. The firmâ€™s app now counts more than 50 million users in over 40 countries across Europe and Africa.
- In November 2020, Meru cabs announced that they are planning to raise USD 54.25 million (INR 400 Crore) from private equity funds. The fundraising plan comes at a time when the company is sharpening focus on providing cabs to corporates and expanding its base of electric vehicles in India.
Owing to the modern taxi category, i.e., booking through mobile application, Uber and Grab gained immense traction from passengers. As more than 70% of the passengers consider taxi service as a convenient and quick commuting feature, the market has immense potential over the forecast period.
Asia-Pacific - Leading the Taxi Market
The taxi market is on the rise in the Asia-Pacific. Players, like DiDi Chuxing, Ola, and Onda, are using the high smartphone penetration rate in Asia-Pacific to their full advantage and are capturing the market share through innovation and cutting-edge technology. These South Asian taxi giants are acing the competition in local geographies and are expanding overseas. Chinese taxi giant Didi Chuxing has started operations in Mexico, Australia, Costa Rica, Japan, and many other countries, whereas the Indian market leader Ola is serving in Australia, New Zealand, and the United Kingdom.
China has the worldâ€™s largest taxi market, and this can be attributed to it being the most populous country. The taxi market in the country began to blossom in the early 1980s. Due to their flexibility, comfort, good availability, and end-mile connectivity offering, taxis quickly became an indispensable service.
India is the second-most populous country in the world, and most of the people fall under the middle-class category who utilize cabs and auto-rickshaws (local three-wheeler taxis) for commuting short distances. The taxi industry is changing continuously even on a quarterly basis, due to the different socio-economic and political situations arising in the country. Pooling/sharing of taxis in the country saw a huge demand and now the bike taxi is becoming even more popular.
Some of the major players in the taxi market include Uber, Grab, Lyft, Ola, etc. Among them, Uber's main strategy to expand its business is to focus on upcoming technologies, like automated driving vehicles.
In 2020, DiDi Chuxing alone accounted for a maximum market share compared to its competitors, followed by Uber Technologies and Lyft. Didi is most widely used taxi app in the Chinese market and prevalent in the Brazilian market. Didi started following the footprints of Uberâ€™s future strategy by launching a trial run of its self-driving technology in Shanghai, China, in June 2020.
The key players in the industry are investing a lot of money in technology. Uber and DiDi Chuxing are working on self-driving cars. Focus is on enhancing the customer experience. In India, there has been a surge in number of customers opting for outstation services. This has led to players, like Ola, Meru, and Prydo, to offer value added services to their customers at very competitive prices. Ola partnered with Apple Music and other music and video streaming services for its prime play service.
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