2020-07-14 20:06:00

BENGALURU: Urban mobility startups are downsizing their fleet by selling off vehicles to the second-hand market as many of them are forced to cut down on both capital and operational costs, said three people aware of the development.

Bengaluru-based Bounce, which had raked in most of the funding in micro-mobility space in 2019-20 is currently selling around 8000-10,000 of its scooters to the second-hand market, said one person aware of the company’s operations.

Bounce, which largely relies on dockless scooter sharing model, invested millions into adding gearless scooters in cities such as Bengaluru, Hyderabad, Mysore among others. Currently, Bounce has over 20,000 scooters on its platform.

The startup’s dockless scooter sharing model which is most prevalent in Bengaluru and Hyderabad used to clock around 100K-120K rides a day before covid-19 hit demand levels sharply.

“Demand for scooter sharing and rental products has been affected and at least half the demand has been wiped out from the market after the lockdown. Bounce even laid off most of the employees in the demand and planning team due to loss in demand because of the lockdown,” said the person mentioned above aware of Bounce’s operations.

Bounce had raised around $105 million at a valuation of $450 million in its Series D funding in January led by Accel Partners and Facebook co-founder Eduardo Saverin’s B Capital, making it the most valued player in the space. Some of its existing investors include Falcon Edge, Chiratae Ventures, Omidyar Network India, Maverick Ventures, Sequoia Capital India and Qualcomm Ventures.

The startup has also resorted to directly selling used scooters to its users as well. Currently, the Bounce website lists its two-wheelers on sale starting from 20,000 for a Scooty Pep, and up to 30,000 for Honda Activa models.

A Bounce spokesperson said the entire proceeds from the scooter sales will be used to invest in electric vehicles (EV) and for ramping investments into infrastructure and technology required for converting its fleet to EVs. The startup had recently announced a tie-up with EV manufacturer Ather Energy to lease out Ather bikes on the Bounce rental platform.

Bounce’s rival VOGO too has plans to “entirely” convert its shared fleet to EVs but it did not provide a timeline.

Anand Ayyadurai, CEO, VOGO said that there has been a “definite paradigm shift in the mobility pattern due to the pandemic” and that the pace of growth in the mobility industry has slowed down. Ayyadurai confirmed that VOGO has also begun hiving off its petrol-based scooters to the second-hand market, but declined to comment on the specifics.

“But we were able to retrieve around 40% of our pre-COVID (demand) volumes post lockdown…We are strengthening our commitment to electric mobility and have outlined a fresh plan to increase EVs on our fleet, and we are planning to phase out petrol scooters,” Ayyadurai added.

Mobility startups such as Bounce, VOGO, Zoomcar and others loan from NBFCs and private banks to finance the procurement of vehicles.

Mint reported in April that the lockdown may have hit debt repayment for these vehicles leased out by mobility players.

Ankur Pahwa, partner and consumer internet leader at EY India said that although hiving of scooter assets can be considered as rationalization of costs, rental startups’ strategy to move to EV is still “economical”.

“There is some rationalization of cost for sure, but currently they don’t have demand, and the intention always was to get to a situation where the fleet is fully electric. The biggest cost for rental players is still diesel and fuel costs, and with EVs, the unit economics looks much better and even attract strategic investors from the EV segment,” added Pahwa.

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