Grab: 100,000 cars won’t oversupply ‘broken’ public transit

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a grab pick up and drop off station is seen at the entrance of kuala lumpur city centre in kuala lumpur

Grab argued that the addition of 100,000 transport network vehicle services (TNVS) providers would not result in an overstock, considering that demand had occasionally surpassed pre-pandemic levels.

Grab Philippines senior director of operations Ronald Roda stated in a statement released on Friday, February 10: “We believe that the number of slots needed to meet demand in 2023 for new and current cities is close to the 100,000 TNVS licenses specified in the LTFRB’s latest announcement.”

In December 2023, according to Roda, demand for Grab’s ride-hailing services reached pre-pandemic demand, despite Grab operating a far smaller fleet of vehicles. Grab only has 19,707 automobiles at present. Land Transportation Franchising and Regulatory Board placed a supply limit of 65,000 automobiles on the company’s pre-pandemic fleet (LTFRB).

Roda thought that the LTFRB’s decision to unlock extra TNVS slots would “just return us to the 65,000 supply cap levels that existed before to the outbreak” for Grab’s Greater Metro Manila operations.

Even with the additional cars, Roda’s new and existing drivers will continue to be in high demand, the company assured.

Theoretically, there will be demand regardless of how many automobiles I put in there, and it’s not because of us. You realize why? Because public transportation is inoperable. “As long as public transportation remains broken – which it is, tragically – there is a limitless need,” he stated during a media roundtable on Friday. “What we’ve instructed some of our drivers is to just chill down, folks. We are not requesting greater supplies. We’re only requesting that you return to your position in 2017. We will not board these trains if demand is insufficient.”

He also disregarded concerns that drivers would be severely impacted, weighing the decision with the need to provide additional employment opportunities.

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“Drivers will remark ‘Uy paano naman kami? Kawawa kami pag nagbukas ka (Hey, what about us? We will be harmed if you add additional spaces.’ And our response is that we will take care of you, but we need to add 80,000 jobs to this business. Huwag naman kayo sakim (Don’t be selfish). Let’s open it up so that people may get employment,” he continued.

Since the epidemic, GrabCar’s numbers have decreased by 65%, and the firm now has only a third of the cars it did in 2019. Many Grab driver-partners had their automobiles seized by banks during the shutdown periods of 2020 and 2021, given that the vast majority of Grab’s driver-partners utilize cars that are financed.

According to him, this supply constraint was the reason of the exorbitant surge charges and lengthy wait times that affected many customers throughout the holidays. However, Roda noted that Grab’s pre-pandemic fleet never approached surge charge levels in 2019.

However, this was not the first time Grab had dealt with fare concerns. The ride-hailing company is presently being investigated by the LTFRB for overcharging. Grab has been requested by the state regulator to explain its surge pricing and minimum tariffs for “short rides.” Teofilo Guadiz II, chairman of the LTFRB, stated on January 27 that Grab had not yet filed its position paper.

Grab has previously been fined close to P40 million by the Philippine Competition Commission for failing to meet its price pledges.

The necessity to get a bank Certificate of Conformity is the greatest barrier for would-be Grab drivers (COC). Approximately 90 percent of all driver-partner applicants, according to Roda, are required to get this paperwork. The paperwork is provided by the bank or financial organization handling the loan, and it permits the driver to utilize the car under the Grab service, even if the loan is not yet paid in full.

However, the majority of financial institutions are reluctant to give a COC out of concern that the car may be destroyed during its service with Grab. In the event that the borrower defaults on the loan, the bank would reclaim a possibly damaged automobile.

This implies that only individuals having auto finance from one of Grab’s six partner banks are eligible to receive a COC and meet the qualifications to become a TNVS provider.

With this impediment in mind, Roda requested the LTFRB to reconsider its restrictions, arguing that Grab could only realistically meet its investment promise if the rules were relaxed.

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