Behavior and economic decisions of OLA auto-drivers while accepting/ rejecting a ride

Abstract

Indian’s three-wheeled auto rickshaw is a traditional form of public transport that is hard to ignore. An outsider’s perspective might reveal a hideous picture with loud engines and open sides and might suggest it be replaced with four wheelers which are bigger, faster and more comfortable. But despite their imperfection, they account for 20% of trips in metro cities, provide employment to thousands and comparatively cheaper to operate. The market size of Indian auto-rickshaws varies from around 15,000 to 30,000 in Tier II cities (with a population of 1 to 4 million) to more than 50,000 in Tier I cities (with a population more than 4 million). It is estimated that there are approximately 4 to 16 auto rickshaws for every 1000 people. This is shown in Exhibit 1. The statistics in Exhibit 2 reveal that auto rickshaw is a growing market largely driven by domestic sales in Tier 2 and Tier 3 cities and some attribution to replacement sales (replacing old vehicles with new ones). Production of three-wheeler has almost doubled from 2003 to 2010. Analysis of Exhibit 3 shows that autorickshaw serves between 10-20 percent of daily person trips in motorized road transport. Although they account for a small percentage of total vehicles (2 to 11 %) they account for a higher number of rides due to their multiple sharing options, availability in all times of the day. Exhibit 4 features the break-up of different purposes for hailing auto rides in India. Shopping, recreational trips, and education account for 25-50% of the trips made on auto-rides followed by work-related purpose (5-10 %).