Leasing startups share a ride with Uber

21/06/2016 - 14:39

Bookmark

Upgrade your subscription to use this feature.

New businesses are gearing up to supply drivers in the state’s ridesharing industry, with legalisation of services such as Uber due to start on July 1.

SPLENDID: Jerry De Mello is supplementing his income through Uber, using a Splend hire car. Photos: Attila Csaszar

New businesses are gearing up to supply drivers in the state’s ridesharing industry, with legalisation of services such as Uber due to start on July 1.

The growth of Uber in Perth has opened the way for a further half dozen or so companies to follow in the ridesharing platform’s success, principally via car-leasing and car rental agreements.

Splend is one example, led by Perth-born entrepreneur Chris King, who moved to Sydney four years ago.

“I was a user of Uber as a passenger from almost day dot,” Mr King said.

“What I noticed over the (next) couple of years is Uber went from a hobby or a bit of a niche to a serious full-time occupation.”

However, some Uber drivers were using their family cars, which came with comparatively higher costs, particularly in terms of fuel consumption and vehicle maintenance, he said.

Mr King said the idea for Splend was formed over the “kitchen table”.

“The first employee was actually my housemate,” he said.

“What we discovered (was) it wasn’t the drivers with the cars that … was our target market.

“It was all of the potential drivers that didn’t have a car or one that complied with requirements.

“There was a chronic shortage of drivers in Sydney about a year ago … there’s plenty of people here that are seeking work but they just didn’t have the right car.”

Mr King stitched together financing from vehicle financiers and other parties to invest in $60 million of cars across the country, with about $6 million destined for Western Australia.

Additional to covering maintenance and licensing expenses, Splend provides coaching for drivers to support them earning an income through Uber, Mr King told Business News.

Splend drivers use a short term rental agreement under which car are charged on a week to week fee.

Market

Other companies have been circling the market, including hire car players, Business News understands.

Among these is Cars4Ridesharing, which has been created by the team at charter vehicle company Andrew Hill Executive Transport.

Chief executive Matt Dale said demand in the charter vehicle industry had been lighter as the mining boom wound down, but saw plenty of opportunity in the new venture.

“With the new regulations, there’s probably going to be increased demand,” he said.

Mr Dale predicted that a less-regulated market could draw in other entrants competing with Uber, which would be able to use his company’s platform.

Leasing a car through Cars4Ridesharing starts at $195 a week, although Mr Dale said drivers would be given the choice to lease whatever car suited them best, including for high-end Uber Black.

Key, he said, was that the company would be advising potential clients on the best cars to suit their needs, rather than offering a one-size-fits-all package.

Cars4Ridesharing currently owns three vehicles, with financing in place to expand as clients come on board.

Disruptive

The growth of Uber in Perth has been rapid and disruptive, moving the city away from a government-sponsored cartel of taxi plates that erected large barriers to entry into the sector.

Big regulatory changes are due on July 1, including the introduction of a new on-demand licence category and movement to cost recovery in licence fees.

There will be an additional $27.5 million assistance package for plate owners, although it has been reported the state government is considering a $1 per ride tax on both taxi and Uber customers to bolster the fund.

Uber had gradually expanded its offering in Perth since launching as Uber Black, with consumer market Uber X the next cab off the rank, followed by others such as UberAssist, helping customers with disabilities.

National general manager Simon Rossi revealed to a Business News Success & Leadership breakfast last year that UberPool could eventually come to Perth – a service that allows riders to share trips with others on similar routes to save costs.

Job creator

Business News has spoken to a number of Uber drivers, including those who had previously worked in the mining industry and had used it as a supplementary form of income.

Driver Jerry De Mello, who was originally from Singapore, has been using a Splend vehicle to work through Uber for three months.

Mr De Mello had decided to enter the market as his renovation business eased due to the economic slowdown.

One survey undertaken by Uber found that 18 per cent of the company’s Perth drivers were unemployed before starting with the company, while others own businesses, and are supplementing income.

 

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

Subscription Options