Lyft recently reported their 2017 financial and operational figures which showed significant growth over 2016. Its performance showed a marked increase signifying growth to rival that of industry leader Uber. The ride-sharing company almost doubled their market share from 10% to 19%, solidifying their position as the second largest ride-sharing company behind Uber.
Uber had an 81% market share even with the various problems and issues it faced. Lyft also had a 130% increase in number of rides from the previous year, with 375.5 million rides. This is attributed to them doubling their number of drivers, as well as opening other markets.
Contributing to the growth of Lyft was their first foray into the international market as they started offering rides in Toronto, Canada. Overall, Lyft has 1.4 million drivers located in all 50 states, and Toronto. Uber has only 750,000 drivers in the US. Outside of the US, where Lyft has no presence, Uber has 2.25 million drivers in 78 countries with 4 billion trips. Lyft’s Toronto presence is being interpreted as a test of whether they can deploy their services abroad. If Toronto proves successful, expect Lyft to increase their foreign presence.
Lyft’s growth is phenomenal nonetheless. It projects financial growth at more than 100% for the first quarter of 2018. This will be the 20th consecutive quarter that Lyft’s revenues grew more than 100% every quarter. It had a 168% growth in the fourth quarter of 2017, which was almost three times the growth of Uber. Uber earned more in actual dollars with $2.2 billion revenue in the fourth quarter of last year. In comparison, Lyft earned $1 billion for the whole of 2017.
The company is committed to continuing its blistering pace if it can. It aims to provide more than 10 million rides a week, which would increase their annual number of rides by almost 40%. Lyft achieved its growth not just by increasing drivers, but also by good fiscal management. It plans to continue cutting marketing and sales costs.
In terms of market reach, Lyft will push to compete against Uber and other ride sharing startups. The ride sharing market has carved up the market to the detriment of traditional players. In 2015, rental cars accounted for half of the business travel by ground transportation. Nowadays, rental cars account for only 23%, taxis at 6%, and Lyft and Uber accounting for a combined 71%.
The Next Wave of Ride Sharing
The next phase of the ride-sharing competition seems to be the use of autonomous vehicles. Waymo, an Alphabet company, already has approval for a driverless ride-hailing service in Phoenix, AZ. Uber is still in the research and development stage of their autonomous vehicle use. In line with this, they formed a group specifically to developing an autonomous driving vehicle. In contrast, Lyft is working with NuTonomy in using self-driving vehicles. One of the advantages of the use of an autonomous vehicle is that there is no salary or driver share in earnings.
Lyft is approaching ride-sharing from another angle. They are experimenting the use of a subscription mode of payment. This would be an easier and cheaper way for ride-sharing customers. Other ride-sharing companies have started using e-wallets for their ride-sharing apps. This is a convenience for riders, and if used with a subscription model would lead to more savings for customers.