Indonesian ride-hailing tech company Go-Jek is coming to Singapore in a matter of months, if news reports citing unnamed sources are to be believed.
And when it does, commuters would be blessed by renewed competition with Grab as it unleashes new promo codes and ComfortDelGro would be extended a new life line as it struggles to stay buoyant.
And all signs currently point to the fact that ComfortDelGro needs the partnership. Here's why.
What is the progress of Go-Jek in Singapore?
• Go-Jek looks like it wants to enter the Singapore ride-hailing market via a tie-up with ComfortDelGro and talks have occurred.
• Go-Jek is predicted to start operating within a few months' time, which is good news for commuters as Grab is the dominant player at the moment.
Why would ComfortDelGro be eager for a Go-Jek partnership?
• ComfortDelGro is in a precarious position without the ride-hailing technology, as it is essentially a asset-heavy vehicle rental business -- hoarding hardware that does nothing but depreciate by the minute when not rented out.
• Its alliance with Uber was to capitalise on the American company's technology.
• But the Uber deal in December 2017 fell through within a few short months, after Grab acquired Uber's Southeast Asian operations to stem the financial bleeding on both sides.
• ComfortDelGro is also more invested in vehicle fleet management -- its forte -- than technology development and innovation, or industry disruption.
What did ComfortDelGro try to achieve with Uber?
• Looking at the structure of ComfortDelGro's alliance with Uber is instructive.
• ComfortDelGro had previously entered into an agreement with Uber to acquire a majority stake in Lion City Rentals, a private-hire car fleet here owned by Uber, which has a fleet of about 14,000 vehicles.
• The agreement included ComfortDelGro having exclusive rights to use the Uber app for its taxi drivers.
• The deal allowed Lion City Rentals' private-hire cars to come under a centralised fleet management system by ComfortDelGro, which then handled the dispatch of vehicles to customers.
• ComfortDelGro cabbies could potentially earn more as they get ride requests through the Uber driver app and Uber drivers can get bookings from ComfortDelGro's customers.
• The tie-up was also a likely response to Grab, which has teamed up with the other five taxi companies in Singapore.
• ComfortDelGro has also been looking to maintain market share in the disrupted sector ever since Uber and Grab joined the scene in 2013.
• ComfortDelGro's taxi fleet has shrunk by more than 20 percent to about 12,700 since the arrival of Uber and Grab, even though the listed group still has the majority share of the market.
What's in it for Go-Jek?
• It doesn't have to enter the market by starting from scratch.
• A host of smaller services, such as Ryde and India's Jugnoo, are planning to start in Singapore, but they lack the positive network effects which are needed to kick in to generate a critical mass of riders and drivers.