Ride-hailing apps drive demand for small cars

The sale of small cars like Hyundai i10, Daewoo Matiz, Kia Picanto, among others, was not too encouraging for secondhand car dealers, until about a year ago, but they nevertheless kept them to offer some variety to potential buyers.

According to garage owners, most buyers would normally go in for a saloon or sedan. Most of these cars were bought for largely private use, even though some turned them into taxis for commercial use.

Small cars with engine capacities of between 0.8L and 1.4L were favoured by those who wanted a cheap car with minimum fuel consumption but provided little in terms of luxury as compared to the sedan or saloon cars.

Two years ago, however, when San Francisco-based Uber chose Accra as one of its cities for its popular ride-hailing service, little did secondhand garage owners know that lady luck will be smiling on them.

The coming of Uber to Accra also ushered in a number of other ride hailing services such as Taxify, Droppn, Yenko, among others, competing for passengers mainly in Accra and its immediate environs.

When these ride services came, there was a diversity in terms of the type of cars registered on the platform – ranging from saloon, sedan and, in some rare cases, SUVs out there for riders or passengers.

But the relative affordability of these ride services meant that for car owners on Uber to make returns on their investment they would have to opt for cars that have very good fuel economy which will in turn cut down on their operational expenses.

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Steps in the fuel efficient small cars with very low engine capacities.

According to George Affram, a car dealer at Dependable Motors in Tesano, before the proliferation of these ride services, his garage usual sold between one and two of such small cars in a month, describing the market then as being “someway.”

Typically, such cars could cost as low as GH¢17,000 and as high as GH¢19,000. Now, however, the prices of these so-called small cars have shot up to match market demand for these fuel-efficient cars.

According to George, a lot of people who come in to get these small cars do so because they want to put them on Uber or any other ride service. As a result of this increase in demand, garage owners like George Affram now sell not less than 11 of such cars in a month.

Now, though, the cheapest small car up for sale at George’s Dependable Motors costs at least GH¢20,000, whilst the most expensive goes for above GH¢24,000.

According to him, the company has a lot of returning customers and has, as such, put in place discounts for such customers. Indeed, it is lucrative for car owners on Uber who get at least GH¢500 in weekly sales after the deduction of costs on fuel and mobile airtime for their drivers.

Due to its profitability, many car owners on Uber have their own fleets that fetch them income. When Uber first entered Ghana, its selling point was for private car owners to share their ride with other people heading in the same direction as them. But that has largely changed because people have invested in a fleet instead.

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Depending on the sort of arrangement between car owners and drivers, whether “work and pay”, where the driver gets to drive without salary and the sales go into clearing the price of the car – or where the driver is paid monthly, car owners are making a lot of money.

Paapa Asamoah, who owns Paco Garage at Dome in Accra, attributes the boom in his small car business to Uber. He is confident that a lot more people would get into the Uber business if the price of such small cars is made affordable.

While he sells four of such cars in a week for at least GH¢22,000 each, he believes that should Uber put in place a flexible payment plan for drivers, many more of such cars would be sold and garage owners would always be smiling to the bank.

Ride hailing services like Uber may face some sort of antagonism from local taxi drivers and sometimes the regulators, but there is no doubt that their presence has, in many ways, benefitted car owners, garage owners and, most importantly, drivers.

 

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