Uber and Lyft have a shortage of drivers. With the number of executives for both programs in the U.S. down about 40 percent, the two companies promise to spend hundreds of millions of dollars to lure people back into the executive seat.
Uber announced on Wednesday that it will launch a $ 250 million ‘stimulus’ for drivers in hopes of speeding up their return to the platform.
“In 2020, many drivers stopped driving because they could not count on getting enough rides to make their time worthwhile,” said Dennis Cinelli, Uber’s vice president for mobility in the US and Canada. wrote a blog post. “In 2021, there are more riders requesting travel requests than there are drivers available to host them. It’s a great time to be a driver.”
Lyft currently covers the cost of rental cars, offering $ 800 bonuses to drivers to return to the app, and giving extra cash to drivers if a trip lasts longer than nine minutes, according to the Financial Times.
The hope is that these incentives can help persuade drivers who have been signed off after being discouraged by the lack of riders to eventually return. A major challenge for this effort, however, is that COVID-19 is still a major pressure on Uber and Lyft’s respective ventures.
As numbers increased over the winter, both companies lost a significant portion of their customer base. People stayed home, or when they went out, they chose not to use apps with a ride. In the last quarter of 2020, Uber said it had only 93 million ‘monthly consumers of an active platform’, which is the usage period for users who take at least one ride on Uber or buy at least one meal on Uber Eats – a decrease of 16 percent in the year. Meanwhile, Lyft reported a 45 percent drop in monthly active users, from 22 million in the fourth quarter of 2019 to 12.5 million in 2020.
Uber claims that demand is ‘coming back’, but how much we will not know until the company reports its first earnings report for 2021. It seems logical that as vaccination rates rise, more people will start using Uber and Lyft. again. But it will depend on many factors, including the reopening of offices, return to leisure activities, recovery of business trips and people starting to return to their daily routine.
According to information from Apptopia, the number of drivers in the U.S. reported to Uber decreased during the first three months of 2021, by 37.5 percent year-over-year. Lyft had a decline of 42.3 percent over the same period.
Last year, both companies were focused on reducing costs, and this often means that the supply of managers is actually limited. In its latest earnings report, Lyft said it should prevent new executives in some markets from joining the app, while reducing spending on marketing and other incentives. “Given the effect on demand, we were able to reduce driver purchases and incentive spending, which had a positive effect on our financial results,” Lyft CEO Logan Green said in an earnings call.
With the waiting time increasing in some cities, businesses will now have to turn around and spend money to encourage drivers to return to the app.