Rapido Eyes a Bigger Slice of the Ride-Hailing Market with Four-Wheeler Push

Rapido is shifting gears. Known for its bike taxis, the ride-hailing company is now doubling down on four-wheelers as it chases a bigger share of India’s cab market, which is dominated by Ola and Uber.

“Currently, we’re north of 20% market share in four-wheelers. We’re looking to be at over 30% pan-India by the end of 2025,” stated Pavan Guntupalli, one of Rapido’s co-founders.

Rapido also plans to double its presence across cities in India this year. “From our existing 120 cities, we will be going to 500 cities by the end of the year,” added Guntupalli.

Rapido is banking on its “unique” approach to the ride-hailing market for its four-wheeler push. Unlike incumbents Ola and Uber, which operate on a commission-based model, Rapido has taken a subscription-based approach or SaaS (software as a service) model.

Instead of taking a cut from every ride, Rapido charges its drivers — referred to as captains — a fixed monthly fee to use its platform. Drivers have an option to choose between a daily, weekly, and monthly subscription.

“When you start being a technology provider to a captain, he himself will maximize his earnings. He uses the tools that we provide and figures out how to maximize his earnings at a very nominal cost. This means that he has a lot more pricing power,” Guntupalli explained.

Rapido claims this model has unlocked a new supply of drivers who had previously been reluctant to join the ride-hailing economy. According to the company, 15% of its driver base comprises individuals new to the sector, drawn in by the subscription model. “We’re tapping into a supply that wasn’t interested earlier thanks to our SaaS model,” said Guntupalli.

Initially introduced with two-wheelers, the subscription model later extended to auto-rickshaws and, more recently, to four-wheelers. The company now claims to complete around half a million rides daily across its four-wheeler segment alone.

Rapido gives drivers all the leeway when it comes to charging for rides. “Pricing as an element is something that we don’t control. We give the tools to both riders and captains to coordinate better,” noted Guntupalli.

Industry experts believe that despite the presence of incumbents in the market, there’s more than enough space for new players. “City infrastructure is being challenged, commutes are getting longer, and younger generations are shying away from buying cars, opting for asset-light living. As a result, ride-hailing is a great option,” remarked an industry analyst.

Analysts say Rapido’s success in four-wheelers will hinge on three pillars: brand positioning, service quality, and safety.

“They need to decide whether they’ll stick to intra-city rides or venture into intercity. Will they focus on ICE vehicles, electric vehicles, or hybrids? These choices will shape their brand,” the analyst noted.

Service is going to play a key role in commuter acceptance of the company’s four-wheelers. While the company started with a two-wheeler focus, expectations, and demands from users when it comes to cabs are different: are they clean, does the AC work, do drivers arrive on time, do they ask for more money?

“The hope is that drivers will use that extra income to reinvest in their cars, something which has been a problem with other models,” said a senior manager at a public research firm.

Rapido believes its SaaS model can potentially be the deciding factor here, given their recurring fee structure. “Our simple philosophy is that if our captains are happy, they will themselves provide a better experience to users,” stated Guntupalli.

On the safety front, Rapido says it offers both reactive and proactive measures of keeping track. Riders can share their trip status with contacts, and the company runs a round-the-clock support team. Background checks and police verification are part of the onboarding process. “For every late-night drop that happens, we proactively check whether the customer has reached safely,” mentioned Guntupalli.

Rapido’s push into four-wheelers this year is also a hedge against regulatory uncertainty around two-wheelers. Last month, the Karnataka high court ordered a ban on bike taxis unless the state issues specific guidelines. Similar restrictions are under consideration in other states.

“With bike taxis facing increasing regulatory hurdles and legal challenges across multiple states, it’s only natural for companies like Rapido to diversify their offerings. Expanding into the four-wheeler market allows them to hedge against the uncertainty surrounding the bike taxi sector,” noted an industry executive associated with the ride-hailing industry.

Bike taxis account for 50% of Rapido’s revenue, with the remainder being split between three-wheelers and cabs, according to the company.

Founded in 2015 by Aravind Sanka, Pavan Guntupalli, and Rishikesh SR, Rapido started as a bike taxi aggregator before entering the three-wheeler market. The company entered the four-wheeler market in October 2023.

Rapido’s latest fundraise was a $30 million investment as part of a Series-E extension round led by a Dutch investment firm. The company last year raised $200 million as part of a Series-E round, which bumped the company’s valuation to $1.1 billion, making it a unicorn, a startup with a billion-dollar valuation.

Rapido’s revenue rose 46.3% year-on-year to ₹648 crore in FY24, according to regulatory files. The ride-aggregator also narrowed its losses from ₹675 crore in FY23 to ₹371 crore in FY24.