Why two-wheeler renting start-ups will see demand surge post Covid

As workplaces reopen in a phased manner, alternatives to public transport and cabs will be in demand as people look to ensure social distancing. With unemployment rates peaking and firms introducing pay-cuts to stay afloat, buying a new vehicle will cease to be the go-to option.

Enter micro-mobility start-ups — firms that rent bikes and scooters typically for short-distance commute. Despite the initial hiccups due to the lockdown and the restricted movement, these firms have been seeing an uptick in demand of late.

Increase in demand

“A significant change that we noticed post lockdown was the average increase in the trip distance, with riders completing long distances of more than 5-10 km on our bikes,” said Vivekananda Hallekere, CEO and co-founder, Bounce. He added that compared to what they saw earlier, rides are now more spread out, with different commute patterns and more errands by two-wheeler scooters.

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Data from Venture Intelligence, a firm that tracks private companies’ investments, financials and valuations, showed that in 2019, start-ups in this sector garnered the highest venture capital investment — $157 million — in the past four years. This year, too, in the January-to-August period, this segment managed to rake in $139 million.

Ashwarya Singh, CEO and co-founder, Drivezy, said the company has seen a 35 per cent rise in weekday bookings as more and more people are opting out of cabs and public transport, and are choosing to rent bikes on a monthly and quarterly basis.

A recent KPMG report stated that the penetration of two-wheelers in India has increased from 39-40 per cent in 2010 to nearly 60 per cent in 2019 and that, Covid-19 is expected to accelerate this trend further. In the post-Covid world, experts said, the public will lean more towards these small-format mobility options.

The way forward

“In the pre-Covid era, public transport services catered to a major portion of the population. With increased awareness and alertness, as people try to maintain social distance, they are preferring to use private transport options. Owning a vehicle is an expensive solution for people and it also negatively impacts the available public infrastructure. Micro-mobility services solve both these issues in short as well as long term,” said Anuj Golecha, co-founder, Venture Catalysts.

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“The post-Covid world will force a lot of people to adapt to private vehicle transport and the lightest-on-pocket way for anyone to do that will be to use rented or shared vehicles. It will be a very exciting space to see as an investor over the next few months as interesting start-ups come up to cater to this demand,” Golecha added.

Bounce and VOGO are among the micro-mobility firms that received investment this year, data from Venture Intelligence show. According to the KPMG report, 19 per cent of people who used public transport and 15 per cent who used cabs pre-Covid are expected to shift to two-wheelers in the short term post Covid.

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“Models within the sector that allow consumers to maintain distance and models that focus on sanitised delivery have a future,” said Pankaj Raina, Managing Director, Research and Investments, Zephyr Peacock India. “General health awareness implies that micro-mobility would be the preferred option going forward. I am of the view that in the long term, micro-mobility solutions will attract consumer demand.”

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