What Makes Uber Tick in Malaysia? - ww3.frost.com · 2 Table of Contents Section Slide Number A....

What Makes Uber Tick in Malaysia?

Insights into the consumer preferences and behavior

31 May 2016

2

Table of Contents

Section Slide Number

A. Snapshot of Key Findings and Executive Summary 03

B. Uber in Malaysia: An Introduction 08

C. Findings from Frost & Sullivan Survey

C1. Profile of Respondents 12

C2. Usage of Uber 13

C3. Satisfaction with Uber 17

C4. Service Improvements 18

C5. Competition 19

C6. Reasons for Not Using Uber 20

D. Key Takeaways 22

3

Snapshot of Key Findings

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Executive Summary (1/3)

Frost & Sullivan conducted a survey to gauge the preferences and usage patterns of consumers

in Malaysia. Various segments were included in the sample mix

In Malaysia, Uber offers three options (uberX, uberXL and UberBLACK). The options differ in

terms of fare as well as size/type of vehicles

Uber‟s fare includes a base fare and fares based on time & distance. The fare is lower than local

taxis in Malaysia and is usually lesser than GrabCar

Uber has around 60,000 drivers in Malaysia and plans to add another 100,000 in 2016

Out of the total respondents, 79% indicated that they use Uber. The frequency of usage ranges

from low (1-2 times a month) to very high (i.e., everyday)

1

2

3

4

5

Out of the 21% respondents, who indicated that they never use Uber, 75% own a vehicle 6

5


30% interviewed Uber users indicated that they use it as their primary mode of transportation. In

case of users who own a vehicle, 14% use it as primary mode

Interestingly, 78% respondents who own a vehicle still use Uber. Usage among 57% non-vehicle

owners is „High‟ or „Very High‟

Lower fares, poor public transport infrastructure, and presence of better vehicles (in Uber)

compared to local taxis are the main reasons for the uptake of Uber

72% interviewed expats indicated that they use Uber. 51% expats have „High‟ (3-5 times a week)

or „Very High‟ (everyday) usage

Out of respondents who own vehicle and use Uber, 86% use it on weekdays and/or weekends.

Around 10% use it only on weekends

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8

9

10

11

85% Uber users are happy with the services, where as 11% indicated that they are unhappy 12

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A large portion of Uber riders use other services as well. MyTeksi is a popular option

Reasons cited by users who are unhappy with Uber include timeliness (“sometimes drivers take too

long to arrive”), difficulty in finding vehicles, surge pricing, and poor navigation system

41% interviewed Uber users said that surge pricing should be stopped, 33% suggested that it

should be reduced and 30% suggested instead of surge pricing, there should be user-defined tip

63% interviewed users have suggested that Uber should increase coverage to more cities; 59%

have suggested to improve the time taken by drivers to arrive

Some respondents indicated that they do not trust Uber drivers in terms of finding the shortest/

fastest route. Hence, if they are in a hurry, they opt for local taxis (typically through MyTeksi)

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14

15

16

17

21% respondents indicated that they do not use Uber. The primary reason is that they prefer

using their own vehicles as it offers more convenience 18

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C5. Competition 19


D. Key Takeaways 22

8

In Malaysia, Uber offers three options (uberX, uberXL and UberBLACK). The

options differ in terms of fare as well as size/type of vehicles

Uber in Malaysia: Offerings

Source: Frost & Sullivan Analysis; The Star Online; Note: All trademarks, icons & logos are acknowledged as the property of their respective owners. Frost & Sullivan does not claim

ownership of them;

uberX uberXL UberBLACK

Low cost

Small vehicles (typically

hatchbacks or economy

sedans)

Suitable for individuals,

couples

Medium cost

Spacious vehicles (typically

MPVs)

Suitable for small families or

people with luggage

High cost

Premium cars

Suitable for individuals, groups

or families looking for luxury

and style

Uber in Malaysia: An Introduction

Uber has around 60,000 drivers in Malaysia and plans to add another 100,000 in 2016

9

Rider makes the booking through a mobile application. The ride is cashless

Uber in Malaysia: How it works?

Source: Frost & Sullivan Analysis; Note: All trademarks, icons & logos are acknowledged as the property of their respective owners. Frost & Sullivan does not claim ownership of them;

Step 1: Rider uses the Uber mobile application to make the booking

Selects the preferred Uber service (uberX, uberXL, UberBLACK)

Indicates the pick-up point as well as destination

Inserts note for the driver (if any) – for example, the exact pick-up location

Step 2: Driver arrives; rider gets into the car and the driver slides the „Start Trip‟ bar in his/her application

Step 3: After arriving at the destination, driver slides the „Complete Trip‟ bar in his/her application and passenger gets

off the vehicle

Step 4: Rider‟s credit card (details are inserted at the time of the registration) is charged. The charge includes the

fare as well as toll charges (if any). The payment is cashless (Note: Uber is going to offer a cash payment option as

well). The rider receives the copy of the receipt through e-mail


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Uber‟s fare includes a base fare and fares based on time & distance. The fare

is lower than local taxis in Malaysia and is usually lesser than GrabCar1

Uber in Malaysia: Comparison of Fares


Source: Frost & Sullivan Analysis; Uber Malaysia Website, Suruhanjaya Pengangkutan Awam Darat (SPAD), Grab Website; 1. Like Uber, GrabCar uses private cars . The company has

another option called „MyTeksi‟, which uses local cabs; 2. First 1 KM or first 3 minutes; 3. For Klang Valley only; 4. The Company website indicates that the minimum fare is zero.

However, since base fare is applicable, a user would have to pay art least the base fare irrespective of the time/distance; Note: All trademarks, icons & logos are acknowledged as the

property of their respective owners. Frost & Sullivan does not claim ownership of them;

S.No Name of the

Operator/Service Base Fare

Charges as per

time (per minute)

Charges based on

distance (per KM)

Minimum

Fare

UBER

1 uberX MYR 0.95 MYR 0.25 MYR 0.60 MYR 0.95

2 uberXL MYR 2.50 MYR 0.40 MYR 0.75 MYR 2.50

3 UberBLACK MYR 3.00 MYR 0.50 MYR 1.40 MYR 5.00

LOCAL TAXI

4 Budget Taxi MYR 3.002,3

MYR 0.29 MYR 0.87 MYR 3.00

5 Premier Taxi MYR 4.002

MYR 0.27 MYR 1.33 MYR 4.00

6 Executive Taxi MYR 6.002

MYR 0.57 MYR 2.00 MYR 6.00

GrabCar1

7 GrabCar Economy MYR 1.00 MYR 0.00 MYR 1.30 MYR 1.004

8 GrabCar+ Premium MYR 4.00 MYR 0.50 MYR 1.50 MYR 15.00

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C5. Competition 19


D. Key Takeaways 22

12

Frost & Sullivan conducted a survey to gauge preferences and usage patterns

of consumers in Malaysia. Various segments were included in the sample mix

Survey on Uber Usage: Respondent Profile

Source: Frost & Sullivan Analysis; Primary research with Uber users and non-users in Malaysia. Note: The findings in this section are purely based on survey outcome/results

Profile of Respondents

66%

3% 14% 3% 6% 9%

0%

25%

50%

75%

Employed - Full Employed - Part Self Employed Retired Student Housewife

Respondents: Breakdown by Occupation n=140

Respondents: Breakdown by Residential Status Respondents: Breakdown by Car Ownership

60%

11%

29%

0%

25%

50%

75%

Malaysian (ByBirth)

PermanentResident

Expat

77%

23%

0%

20%

40%

60%

80%

Own a Vehicle Do not own a vehicle

n=140 n=140

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Out of the total respondents, 79% indicated that they use Uber. The frequency

of usage ranges from low (1-2 times a month) to very high (i.e., everyday)

Frequency of Usage of Uber: Overall


Usage of Uber

n=140

21%

38%

20%

11% 10%

0%

10%

20%

30%

40%

Never 1-2 times a month 1-2 times per week 3-5 times per week Everyday

Key Takeaways

21% respondents indicated that their usage of Uber is „High‟ (3-5 times a week) or „Very High‟ (Everyday)

Out of the 21% respondents, who indicated that they never use Uber, 75% own a vehicle

It must be noted that Malaysia has very high motorization rate. Large portion of households do own one or few vehicles

(Low) (Medium) (High) (Very High)

14

Interestingly, 78% respondents who own a vehicle still use Uber. Usage among

57% non-vehicle owners is „High‟ or „Very High‟

Frequency of Usage of Uber: Breakdown by Customer Segments


Usage of Uber

22%

16%

28%

48%

3%

8%

19%

25%

15%

4%

38%

33%

7%

19% 18%

0%

10%

20%

30%

40%

50%

Vehicle Owners (n=108) Non-Vehicle Owners (n=32) Expats (n=40)

Never 1-2 times a month (Low) 1-2 times per week (Medium) 3-5 times per week (High) Everyday (Very High)

Key Takeaways

Though 78% respondents who own a vehicle use Uber, 48% have low (1-2 times a month) usage frequency

84% respondents, who do not own a vehicle, use Uber

72% interviewed expats indicated that they use Uber. 51% expats have „High‟ (3-5 times a week) or „Very High‟ (Everyday) usage

15

26%

26%

37%

44%

52%

56%

74%

81%

89%

94%

Good Networking Opportunity

Reputed, Reliable, Global Company

Flexibility of Selecting the Type of Car

Receipts through mails

No Hassle of Finding Parking

Polite Drivers compared to Local Cabs

Cashless Payment

Better Cars compared to Local Cabs

Poor Public Transport Infrastructure

Less Costly compared to Local Cabs

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Lower cost/fares, poor public transport infrastructure and presence of better

vehicles (in Uber) compared to local taxis are the main reasons for the uptake

Reasons for Use of Uber


Reasons for Use of Uber

n=111

Percentage of Respondents

Cashless payment, polite drivers and no hassle of finding parking are the other key reasons

This could be the reason why several

vehicle owners opt for Uber

16

30%

23%

11

37%

14

35%

10

41%

30% interviewed Uber users indicated that they use it as their primary mode of

transportation. In case of users who own a vehicle, 14% use it as primary mode

Uber Usage: How and When is Uber Used?


Uber Usage: How and When is Uber Used?

Respondents who use

Uber

Respondents who own

vehicle and use Uber

In %; n=111 In %; n=84

Out of respondents who own vehicle and use Uber, 86% use it on weekdays and/or weekends. 10% use it ONLY on

weekends

37% Uber users and 41% Uber users who own a vehicle do not use Uber as their primary mode of transportation.

Though they still use Uber on weekdays as well as weekends

As primary/main mode of transportation (weekdays & weekends)

Only on weekdays (home-office and meetings-home)

Only on weekends

On weekdays & weekends but Uber is not primary/main mode of

transportation

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85% Uber users are happy with the services whereas 11% indicated that they

are unhappy

Uber in Malaysia: Satisfaction with the Offerings/Services

Source: Frost & Sullivan Analysis; Primary research with Uber users and non-users in Malaysia. Note: The findings in this section are purely based on survey outcome/results;

1. Compared to MyTeksi and GrabCar

Satisfaction with Uber

1 2 3

Unhappy Neutral Happy


1 2 3



1 2 3



85% Respondents

n=111

4% Respondents 11% Respondents

“Sometimes drivers take too long to arrive”

Difficult to find vehicles in some areas

Surge Pricing

Poor navigation system

Fewer Promotions1

Key reasons cited by users who are unhappy with Uber

18

7%

19%

25%

26%

30%

33%

41%

59%

63%

No change required

Include two-wheelers

Allow user to insert saved note/comment (e.g. saved addressor exact pick-up point) while making a booking

Improve the navigation system/software

Instead of surge pricing, there should be an option for a user-defined tip i.e., additional sum in order to attract drivers

Surge pricing should be reduced

Surge pricing should be stopped

Improve timeliness. Sometimes drivers take too long to arrive

Increase the coverage to more number of cities

0% 10% 20% 30% 40% 50% 60% 70%

63% interviewed users have suggested that Uber should increase coverage to

more cities; 59% have suggested to improve the time taken by drivers to arrive

Uber Services: Improvements/changes suggested by interviewed users


Service Improvements

n=111


Several suggestions are around

the Surge Pricing

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Interestingly, majority of respondents across segments* use other service

providers as well. MyTeksi1 is a popular option

Usage of other/similar service providers

Source: F&S Analysis; Survey with Uber users & non-users in Malaysia. Note: Findings in this section are purely based on survey outcome/results; * Overall, those who do not use Uber,

those who are happy as well as those who are unhappy with Uber; 1. MyTeksi is now known as Grab. It is an on-demand taxi booking service and uses the local taxis; 2. GrabCar uses

private cars/drivers like Uber. The company also offers MyTeksi option which is now known as Grab. MyTeksi (Grab) and GrabCar use a common phone application; 3. Car Sharing using

vehicles with Internal Combustion Engines (ICE) – e.g. GoCar; 4. Car Sharing using electric vehicles - e.g. COMOS; 5. Users not using any taxi, rental, leasing or car sharing services

Competition

60%

51% 57%

75%

51% 48%

51% 50%

29%

38%

22% 25%

3% 0%

4% 0%

3% 0% 0% 0%

11% 13% 13%

25%

0%

25%

50%

75%

Overall (n=140) Not using Uber (n=29) Happy with Uber (n=92) Unhappy with Uber (n=12)

MyTeksi¹ GrabCar² Car Rental/Leasing Car Sharing (ICE)³ Electric Car Sharing⁴ None⁵

The data in the above chart reveal that consumers are not loyal to a particular service provider and pick & choose service

providers on the basis of requirements

Some respondents indicated that they do not trust Uber drivers in terms of finding the shortest/fastest route. Hence, if they are in a

hurry, they opt for local taxis (typically through MyTeksi)

75% interviewed unhappy Uber consumers use MyTeksi. (Note: the sample in this segment is not statistically significant)

20

79% 21% 21%

21% respondents indicated that they do not use Uber. The primary reason is

that they prefer using their own vehicles as it offers more convenience

Reasons for not using Uber


Reasons for not using Uber

13%

17%

34%

50%

63%

Unable to register credit card

Apprehensive about mobiletransaction

Prefer own vehicle as it is cheaperto use

Prefer Grab Car or MyTeksi

Prefer own vehicle as it is moreconvenient

0% 10% 20% 30% 40% 50% 60% 70%

Use Uber (111 respondents)

Do Not Use Uber

(29 respondents)


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C5. Competition 19


D. Key Takeaways 22

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Key Takeaways (1/2)

The future success of the company in Malaysia would significantly depend upon how it tackles

some of the controversies around the services and the income of drivers

In Malaysia, a country with high motorization rate, heavy traffic congestions, parking problems,

and inadequate public transport infrastructure, Uber has managed to provide an alternative,

convenient and affordable mobility option to people

Uber offers three different options, which fit the requirements of most users. Due to the benefits it

offers, Uber has managed to attract non-vehicle owners as well as vehicle owners

It has managed to attract a sizeable number of private drivers (around 60,000), who look for an

additional source of income in difficult economic environment

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4

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Key Takeaways (2/2)

Uber is offering a „sweet-deal‟ to its drivers at this stage as it guarantees a sum based on the

hours clocked-in during peak hours. Some drivers believe that once the company reaches a

threshold, it would no longer offer such a deal. It would be crucial for Uber to ensure that they

retain the existing drivers

The survey findings suggest that Uber is popular among the „non-vehicle owner‟ segment,

irrespective of whether they are Malaysian citizens or expats

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Several interviewed Uber users indicated that the surge pricing is a pain-point and in recent

times, they invariably have to pay slightly higher due to surge pricing. Uber should target wide

availability of drivers by adding more drivers

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Government is putting a lot of focus on improvement of transport infrastructure. Some projects

are due for completion in 2018-19. Frost & Sullivan believes that growth in transport infrastructure

would not act as a „threat‟. Instead, it would present new growth opportunities to Uber

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Research Team

Animesh Kumar Associate Director

Automotive & Transportation Practice

(60) 3620 45818

[email protected]

Lead Analyst & Research Manager

mailto:[email protected]

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