Aggressive GrabTaxi could give listed transport firms a run for their money

ComfortDelGro will be most affected.

Aggressive marketing by GrabTaxi could spell trouble for listed transport players, a report by Maybank Kim Eng revealed.

The report noted that the market could be under-estimating the threat posed by new entrants, which have the capacity to tap almost 21,000 rental cars in the market.

“This is a credible fleet size vs the 28,792 taxis currently on the road. We believe ComfortDelGro could be most affected by the competition as its taxi business accounts for 31% of its sales and 34% of EBIT. On the other hand, as taxi operations account for a much smaller part of SMRT’s business, we doubt that it would be hurt much,” said the report.

Maybank Kim Eng highlighted GrabTaxi’s recent marketing blitz for its GrabCar service, which offered free rides at its launch last weekend.

“We believe that the ongoing revolution in the taxi industry could pressurise taxi rental rates for traditional taxi companies and allow new entrants to tap the pool of rental cars in the market. We believe investors may be under-estimating this threat,” the report noted.

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