This past week Uber had recently revealed that, as of Thursday 07 April 2016, the company would be reducing rates on UberX in Cape Town, Johannesburg and Durban by up to 20%. While this does make the service more attractive to consumers, more than 200 Uber drivers have called for strike action in Cape Town, South Africa over the company’s proposed tariff amendments.
At a Question and Answer session – which was lead by Alon Lits, General Manager for Uber in Sub-Saharan Africa – the company had revealed the reasons behind the price cuts across the country.
According to Lits, “Every city has its busy times and times when things are a little slower. The streets empty as people head off on holiday, and when it’s cold and dark people are not socialising or going out as often as in the summer. Whatever a city’s rhythm, it can be tough for driver-partners to earn money during these quiet periods.”
Lits further stated that: “This is why we have reduced our rates, in order to make Uber a more attractive option to the consumer during these periods. This essentially means that the price cuts have been created to help driver-partners. Price cuts essentially boost demand, during the quiet periods, which ultimately allows driver-partners to make more money.”
Lits continued to say that: ” We are not asking drivers to take our word for it: we are providing minimum payment guarantees until it is clear that this will be the case. If cuts don’t pan out the way we expect them to for drivers, we’ll reassess this price change.”
According to Lits, Uber driver-partners were made aware of the price cut before it had been leaked on social media platforms. Lits explained that information sessions were held across the country, where driver-partners were able to ask questions related to the rate cut.
“It is not rare for Uber to cut prices, the company has already reduced rates in Lagos Nigeria by 25 percent,” Lits added.
“We are busy gathering from riders and drivers to see if this price reduction will be a success or not. If it is indeed successful, it will be made permanent, Lits concluded.
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