An unexpected villain is to blame for the decline — the government.
Nilesh Christopher was the South Asia reporter at Rest of World.
Users are having a crisis of confidence in Sri Lanka’s ride-hailing sector. Frequent riders of Uber and its local rival PickMe have flooded social media with complaints about excessive surge pricing and the unavailability of drivers when they need them the most.
“It’s been really hard to find drivers,” said Ravindu Gamage, a resident of Colombo. “For the first time in my entirety using Uber Eats, a restaurant literally went unavailable as I was trying to check out because the last rider in the area went offline.”
Prompted by these complaints, researchers at open-source intelligence research collective Watchdog conducted an online survey of 300 users and found that wait times for tuk-tuks over the course of the pandemic have increased from less than five minutes to about 30 minutes. Meanwhile, many have bemoaned the doubling of estimated fares on PickMe, speculating that the company is beefing up rates ahead of an impending IPO . But industry analysts say there’s another, much more significant reason behind the ride-hailing crisis: an unprecedented vehicle supply crunch.
To control the outflow of capital, Sri Lanka instituted a ban on the import of vehicles in March 2020. The supply crunch of new cars has meant that “secondhand vehicles often sell for more than their original market rate,” said Yudhanjaya Wijeratne, researcher at Watchdog. For instance: a five-year-old Toyota Land Cruiser costs $312,500, three times the pre-ban rate . Large parts of the existing fleets have gone offline, as taxi drivers sell their cars and cash in on the exorbitant prices.
The high cost of buying a new car and servicing old vehicles, combined with an inflation rate of 14.2% and high fuel prices, means that it’s become increasingly difficult for drivers to make respectable earnings through ride-hailing apps.
Driver unions say that the pressure on earnings has been exacerbated by increased platform commission fees from 15% to 20% — both on PickMe and Uber.
The Sri Lankan story is part of a global trend: many gig workers are in a much more precarious position than when they started working on their platforms. In India, both Ola and Uber were forced to cut back their vehicle fleets, as over 35,000 vehicles were impounded in just the past year.
This essay was originally published in our South Asia newsletter. You can read more coverage from the region here .
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