“IN 2 OR 3 MONTHS the taxi drivers WILL BE OUT OF WORK”: WHAT WILL HAPPEN TO THE TAXI MARKET?

As the restrictive measures were introduced in various regions of the country, the demand for taxi services began to decline rapidly. There is no need to go anywhere as all the screens say you need to stay home. As a result, the owners of online services began to reduce payments to their partners, and the latter began to resent, but continued to work, being aware of the competition. After some time, the managers and sales consultants, who were left without work, might come to the taxi market.

The expert of “Rusbankrot”, CEO of “Polyakov Finance” Alexei Polyakov, who has a working experience in “Gett” and “CarPrice” taxi companies, has a slightly different opinion. He believes that in the nearest future the taxi industry will face a serious crisis - in the next 2-3 months, taxi drivers will enter the labor market, because they will not have funds to pay for renting the cars.

“Only those, who work on their own cars, will remain in the market. However, these people will be practically out of work, if the state of emergency is imposed. In some regions, emergency situations have already been introduced; according to this, people will no longer use taxi services, because every movement is monitored and evaluated by the government structures, ”said Alexei Polyakov.

The expert added that the maximum revenue of the taxi business is generated in mega-cities - Moscow and St. Petersburg. If emergency situations are introduced in these cities, there crisis in the industry will be inevitable.

Today's taxi market consists not only of the owners of taxi companies, their employees and entrepreneurs. In recent years, the market has acquired a polymorphic nature. Now it includes both online services and taxi aggregators, as well the passenger insurance system and organization of travel tariffs.

The size of guaranteed payments is one of the market regulators. They, as it is known, are directly dependent on the number of orders and the characteristics of regional transportation. The main problem is the business model, according to which it is necessary to operate in the new conditions, expecting the help of the state or the company’s own bankruptcy.

Many experts believe that the model, according to which guaranteed payments were a way of stimulating the signing of a partnership agreement, begins to fail. There is no need to pay in the new conditions, as the structure of the trips themselves is changing. As a result, many people are beginning to cut the payments. Both “Yandex.Taxi” and “CityMobil” companies complain about this.

The service owners note that demand in large cities has been declining by 20-40% in recent days. Taking into account these indicators, the desire of the companies to join forces is quite understandable. Reducing partnership “guarantees” is only one of the possible measures to compensate for the demand that has fallen as a result of public sanitary and epidemiological measures.

Our interlocutor Alexei Polyakov also noted that all kinds of the trips are in decline now – the trips of economy, business and premium class.

“Gett is supported by investors’ and borrowed funds, remaining isolated and not having a strong investor or holding company that can support it in such a difficult period at the same time. Unlike “Gett”, “CityMobil” is a joint venture between “Sberbank” and “Mail.ru Group”, which provides the stability and the ability to withstand bankruptcy regardless of demand in the taxi market,” emphasized the expert.

Aleksey Polyakov also said that it is quite difficult for “Gett” to resist other strong taxi aggregators, which are continuously gaining a significant market share. Nevertheless, “Gett” managed to achieve certain profitability figures, but 2020 made its adjustments to the business plan, forcing the company to intensively seek additional financing.

“The current possible deal with “CityMobil” is an excellent way out, since the idea of an IPO in the nearest future is crazy,” believes Polyakov.

We should note that some taxi services are now trying to survive by the re-profiling of the companies to the courier services. The PR Director of “Yandex.Taxi” Vladimir Isaev stated that the delivery of goods may turn out to be a new source of income for entrepreneurs, working in this field. A pilot project of this kind has already been launched by “Vezyot” company in the southern regions of Russia. “CityMobil” is also considering investments in this area.

Another way to solve the problem is structural integration. There is information that “Gett” and “CityMobil” may conclude a merger deal. In fact, the companies repeat the act of “Yandex.Taxi” and the Russian branch of “Uber”, which united on a negative background. The experts believe that in this case, “CityMobil”, being the brainchild of “Mail.ru Group” and “Sberbank”, will acquire “Gett”, and the latter will own the corresponding share.

The CEO of “Polyakov Finance” noted that “Gett” and “Citimobil” are indeed discussing the terms of the merger.

“Now we can talk about the complete takeover of “Gett’s” business in Russia in exchange for a stake in “CityMobil” or in a joint venture of “Sberbank” and “Mail.ru Group”, which includes this aggregator. The restructuring of the “Gett’s” loan for $ 100 million at “Sberbank” may also be a part of the deal,” said the expert.

Aleksey Polyakov also emphasized that “Yandex.Taxi”, on the contrary, postponed purchases until better times - the company withdrew the request to purchase the “Vezyot” service due to falling demand and the need to focus on supporting partners, drivers and taxi parks. However, the decision of “Yandex” is quite logical, since the demand for taxis has indeed fallen and continues to fall not only in the Russian Federation, but also in other countries, affected by quarantine.