Ride-Hailing Market - Future of Taxi Apps & Factors Driving Their Growth

In 2018, the global ride-hailing market reached a value of $50.4 billion and is predicted to generate $120.2 billion in 2024, advancing at a 13.0% CAGR during the forecast period (2019–2024). The market is witnessing growth due to the rising concerns toward environmental degradation, government initiatives, convenient and economically efficient mobility option, and road congestion in urban areas. Ride-hailing services are offered by transportation network companies that utilize online mobile applications for matching commuters’ transport needs of reaching specific destination from specific origin

When vehicle type is taken into consideration, the ride-hailing market is categorized into executive, luxury, and economy. The economy category accounted for the major share of the market during the historical period (2014–2018) and is projected to dominate the market during the forecast period as well. The reason for this is that the number of cars offered in this category is the highest as compared to other categories. Majority of the customers opt for ride-hailing services for shorts and medium distance travels and do not prefer to invest in luxury or executive cars.

Among all the regions, namely Asia-Pacific (APAC), North America, Europe, and Rest of the World, the APAC region dominated the ride-hailing market during the historical period and is further expected to account for the largest share of the market during the forecast period. This is because of the rising requirement for ride-hailing services in the region and increasing concern regarding surging pollution. In addition to this, the need for alternative mobility options for dealing with road congestion during peak hours and growing internet penetration are also contributing to the rising demand for these services APAC.

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A major driving factor of the ride-hailing market is that this mobility option is convenient and economical. High investment, which includes fuel cost, maintenance charge, vehicle cost, insurance cost, and parking expense, is required for owning a private vehicle. However, ride-hailing services allow users to enjoy the facilities of owning a private vehicle and make payments on the basis of their usage only. The additional expenses are taken care of by the service providers. Furthermore, these services are particularly convenient for the daily commuters, as they are generally available round the clock and throughout the year.

The increasing concern toward environmental degradation is another primary driving factor of the ride-hailing market. Environmental agencies’ concerns regarding the degrading quality of air caused by the rising amount of exhaust fumes from vehicles are resulting in the undertaking of several initiatives by the government. Greenhouse gas emissions from vehicles have compelled the governments across the world to form strict environmental policies. Ride-hailing services can prove to be an efficient solution regarding reducing the emissions from vehicles, as the increasing use of these services can reduce the number of vehicles on the road.

The introduction of robotaxis is a key trend that is being observed in the ride-hailing market. Autonomous taxis will offer ride-hailing services at much lower cost because of their higher utilization rate as compared to mobility services that are currently present. This can further result in the shift in preference of customers from buying personal vehicles to availing ride-hailing services. Attributing to these factors, different vehicle manufacturers and technology companies are increasingly focusing on the development of autonomous taxis.

Thus, the market is growing due to the surging concern regarding environmental degradation and convenience and economic viability of ride-hailing services.