Taxi segment to corner about 17% of cars sales by FY20: Icra

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26 Aug, 2025 12:21

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Driven by the faster growth of app-based cab aggregators in recent years, domestic taxi market is on course to account for 15-17 percent of total passenger vehicles volume by fiscal 2020, says an Icra report.

Though domestic taxi market is still in a nascent stage, there is huge scope for growth given the low car penetration and poor public transport. Considering strong demand and increasing penetration of the aggragators in smaller town, the taxi market is poised for robust double- digit growth over next two-three years, says the report.

"In fiscal 2016, fleet sales, including to cab aggregators, accounted just about 9 percent of the passenger vehicles volume and this is expected to almost double to 15-17 percent by fiscal 2020," says the Icra report.

It can be noted that the Ubers and Olas of the market have not only disrupted the auto-rickshaw and traditional taxi markets but also forced automakers to revise their growth and marketing strategies by tying up with them.

Domestic auto majors like Maruti, Tata Motors, Mahindra and even the German luxe carmaker BMW among others have formally tied up with Ola and Uber.

While M&M plans to provide 40,000 vehicles to Ola, Tata Motors's arrangement with Uber eyes vehicle purchase and ownership solution. Under this arrangement, cars like Indica/Indigo will be provided by Tata Motors, financed by Tata Capital or Tata Motors finance and insured by Tata AIG.

The trend is very active globally as well. The top three carmakers -- Volkswagen has tied with Gett, while Toyota has an arrangement with Uber, and General Motors with Lyft to leverage changing customer preference.

A typical fleet operator owns around 500 cabs, while aggregators like Ola and Uber have over lakhs of cars with them. Consequently, this segment now enjoys a significant clout, with some OEMs setting up dedicated team to address aggregator market.

While first time-buyers account for only 40-45 percent of the volume now, 30-35 percent of the volume comes from the replacement market and the rest are other segments.