With Bolt, eCabs, and Cool already operating, as well as the local white cabs, is the ride-hailing market drying up?
According to the Times of Malta, Uber will be operating in Malta within weeks. Times of Malta also report that it will be backed by the Maltese multinational Alf Mizzi & Sons and the former CEO of Bolt Malta, Seb Ripard.
What is market saturation?
When an existing product already reache the maximum possible number of customers, that market is said to have saturated. In the case of the local ride-hailing market, this will happen when the supply of drivers begins to exceed the demand for ride-hailing from residents and tourists.
The ride hailing market phenomenon
Most of us use our own cars to travel. But following the liberalisation of the market in 2010, ride-hailing became an increasingly popular niche in the Maltese mobility industry, reaching record levels in 2019. With the pandemic though, people remained inside and tourists arrivals where very low. The sector took a bad hit. Platforms such as Bolt tried to adapt by offering additional services such as the renting of scooters and food delivery.
With the gradual reopening of the economy, demand is returning to the market. In fact, eCabs has seen customer journeys grow by more than 50% during the first three months of 2022, compared to the same period in 2019, which is its best performing year to date. It could be the case that eCabs grew its market share.
But it could also be that the market is still increasing at a remarkable pace. A global forecast carried out by Mordor Intelligence suggests that the global market for ride-hailing is expected to increase at a rate of 8.75% per annum.
Issues in employment policy
These cabs are not self-driving yet, so actual humans are needed to take you from A to B. Worryingly, the Department of Industrial Relations found widespread abuse of employment law in companies that recruit such couriers and drivers, who are then engaged to work for companies like Wolt and Bolt. Justified pressures from trade unions on the Maltese Government to increase regulation in the sector might result in higher costs of employment. These companies will need to raise prices to maintain their profitability, making the service less attractive than before .
All things considered, data, alongside the increasing levels of traffic congestion and road accidents, suggest that the market’s potential for growth is still huge. A recognised global market player such as Uber entering the local market, as witnessed in other European countries such as Portugal, plays a role in increasing demand for ride-hailing, suggesting that the market saturation point is still a long way away. However, the greater the competition, the more ruthless the operators will become. Will this come at the expense of drivers which are already being abused? Only time will tell.