NAIROBI, Kenya, Feb 9 – Uber Kenya has introduced a new service that aims to capture the lower-end segment of the ride-hailing market.
The Kenya Uber office has been testing the Uber Chap Chap service for the last two weeks with nearly 200 Suzuki Altos now operating in limited areas in Nairobi such as the CBD, Westlands, Parklands, Kilimani, Kileleshwa and neighboring residential areas.
Uber Kenya General Manager, Loic Amado, says the Chap Chap service is exclusively using the fuel-efficient 800 cc Suzuki Alto with a consumption rate of 25KM per litre.
“People are using Uber Chap Chap for the shorter errands within the city at a price point that is different from Uber Select and Uber X,” said Amado in an interview with Capital Business.
A ride on the Suzuki Alto starts at Sh16 per Kilometre, Sh4 per minute with a minimum fare of Sh100.
The Uber X – which had been positioned as the budget option – has a minimum fare of Sh150, base fare of Sh85 charging Sh27 per kilometer.
Amado says the foray into a fuel-efficient car was partly as a result of the intense competition in the ride-sharing segment which has been characterized by price wars, strikes by drivers and resistance from traditional cab drivers in the three years Uber has been in Kenya.
“We believe we are creating a new segment in the market but we know there is a possibility of cannibalizing our other segments but what we see is people moving between the products,” says Amado, adding that they are impressed by the high interest and uptake of the service.
Uber Kenya structured a deal which saw CMC Motors (Suzuki franchise holder) import 300 Altos for driver-owners financed by Stanbic bank at a subsidized cost of Sh835,000 per vehicle.
The fuel-efficient car allows the driver-owners to repay the financing as well as extending the benefits of less fuel consumption to riders, says Amado.
“The excitement from the drivers was very clear from the beginning…now all the drivers in Uber Chap Chap are managing their own business through this product.”