Rapido eyes a bigger slice of the ride-hailing market with four-wheeler push-OxBig News Network

“Currently, we’re north of 20% market share in four wheelers. We’re looking to be at over 30% pan-India by the end of 2025,” Pavan Guntupalli, one of Rapido’s co-founders, told Mint in a telephone interview. 

Rapido also plans to double its presence across cities in India across segments this year. “From our existing 120 cities, we will be going to 500 cities by the end of the year,” said Guntupalli.

The company did not respond to Mint’s queries about which cities it is targeting for its four-wheeler growth, or how much it planned to invest in this expansion.

According to research from equity advisory firm Equentis, as of December 2024, Uber dominated the cab category with 50% market share, with Ola sitting at 34% and Rapido at 14%.

Baking in subscription model

Rapido is banking on its “unique” approach to the ride-hailing market for its four-wheeler push. Unlike incumbents Ola and Uber, which operate on a commission-based model, Rapido has taken a subscription-based approach or SaaS (software as a service) model. 

Instead of taking a cut from every ride, Rapido charges its drivers—referred to as captains—a fixed monthly fee to use its platform. Drivers have an option to choose between a daily, weekly and monthly subscription. 

“When you start being a technology provider to a captain, he himself will maximise his earnings. He uses the tools that we provide and figures out how to maximise his earnings at a very nominal cost. This means that he has a lot more pricing power,” said Guntupalli. 

Rapido claims this model has unlocked a new supply of drivers who had previously been reluctant to join the ride-hailing economy. According to the company, 15% of its driver base comprises individuals new to the sector, drawn in by the subscription model. “We’re tapping into a supply that wasn’t interested earlier thanks to our SaaS model,” said Guntupalli.

Initially introduced with two-wheelers, the subscription model later extended to auto-rickshaws and, more recently, to four-wheelers. The company now claims to complete around half a million rides daily across its four-wheeler segment alone. 

Ola and Uber declined to comment on the number of cab rides they clock in a day.

Equentis’ research from December last year shows that Uber completed 8,40,000 rides across all categories daily, while Ola does 4,60,000 and Rapido does 3,20,000. Mint could not immediately verify the claims made in the report.

Incumbents take notice

Ola and Uber have only recently begun experimenting with more driver-friendly payment models. Uber, for instance, still retains online payment options for two-wheelers. The company began piloting a SaaS model for rickshaws last year, with the approach going live pan-India only in February this year. Similarly, Ola opted to go the same route with a launch in major metros last year, which has since expanded. 

Rapido says that it gives drivers all the leeway when it comes to charging for rides. “Pricing as an element is something that we don’t control. We give the tools to both riders and Captains to coordinate better,” said Guntupalli.

The key reason for protest in the ride-hailing space is the dominance of large incumbents, which often leads to unpopular practices like surge pricing, said Soujanya Sridharan, senior manager at public research firm Aapti Institute.

Ride-hailing companies have faced criticism in several states, most recently in Maharashtra where the state’s transport department proposed a cap on surge pricing.

Also Read: Who pays for cancelled rides? Maharashtra’s new cab rules stir industry debate

Rapido says it gives drivers all the leeway when it comes to charging for rides. “Pricing as an element is something that we don’t control. We give the tools to both riders and captains to coordinate better,” said Guntupalli.

Filling a gap

Industry experts believe that despite the presence of incumbents in the market, there’s more than enough space for new players.

“City infrastructure is being challenged, commutes are getting longer, and younger generations are shying away from buying cars, opting for asset-light living. As a result, ride-hailing is a great option,” said an industry analyst declining to be named. “Success will largely depend on execution capability.”

Analysts say Rapido’s success in four-wheelers will hinge on three pillars: brand positioning, service quality, and safety.

“They need to decide whether they’ll stick to intra-city rides or venture into intercity. Will they focus on ICE vehicles, electric vehicles, or hybrids? These choices will shape their brand,” the analyst noted.

Service is going to play a key role in commuter acceptance of the company’s four-wheelers. While the company started with a two-wheeler focus, expectations and demands from users when it comes to cabs are different: are they clean, does the AC work, do drivers arrive on time, do they ask for more money?

“The hope is that drivers will use that extra income to reinvest in their cars, something which has been a problem with other models,” said Sridharan.

Rapido believes its SaaS model can potentially be the deciding factor here, given their recurring fee structure. “Our simple philosophy is that if our captains are happy, they will themselves provide a better experience to users,” said Guntupalli. 

He claims that driver satisfaction scores are the highest in the industry. “Drivers are trying to figure out a way to provide a better experience to riders to get better ratings and get more orders.”

On the safety front, Rapido says it offers both reactive and proactive measures of keeping track. Riders can share their trip status with contacts, and the company runs round-the-clock support team. Background checks and police verification are part of the onboarding process.

“For every late-night drop that happens, we proactively check whether the customer has reached safely,” said Guntupalli.

Also Read: Uber’s lifeline off the table for BluSmart as EV depreciation becomes key contention

Hedging bets

Rapido’s push into four-wheelers this year is also a hedge against regulatory uncertainty around two-wheelers. Last month, the Karnataka high court ordered a ban on bike taxis unless the state issues specific guidelines. Similar restrictions are under consideration in other states.

“With bike taxis facing increasing regulatory hurdles and legal challenges across multiple states, it’s only natural for companies like Rapido to diversify their offerings. Expanding into the four-wheeler market allows them to hedge against the uncertainty surrounding the bike taxi sector,” said an industry executive associated with the ride-hailing industry, on condition of anonymity.

Bike taxis account for 50% of Rapido’s revenue, with the remainder being split between three-wheelers and cabs, according to the company. 

“I think survival is key and the transition to cabs is very much that. You’re at least safe in the eyes of the law,” said Sridharan arguing that even if their main income is shut off by regulation, the supplementary income from four-wheelers should be enough to “keep the lights on”.

Founded in 2015 by Aravind Sanka, Pavan Guntupalli and Rishikesh SR, Rapido started as a bike taxi aggregator before enterting the three-wheeler market. The company entered the four-wheeler market in October 2023. 

Rapido’s latest fundraise was a $30 million investment as part of a Series-E extension round led by Dutch investment firm Prosus. The company last year raised $200 million as part of a Series-E round led by WestBridge Capital with participation from Nexus Venture Partners, Invus, Think Investments, Konark Trust and MMPL Trust. At the time, the round bumped the company’s valuation to $1.1 billion, making it a unicorn, a startup with a billion-dollar valuation.

Rapido’s revenue rose 46.3% year-on year to ₹648 crore in FY24, according to regulatory files accessed by business intelligence platform Tofler. The ride-aggregator also narrowed its losses from ₹675 crore in FY23 to ₹371 crore in FY24.