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ComfortDelgro Corporation Limited is Fighting Back Against Grab And Uber. Is It Too Late?

ComfortDelgro Corporation Limited (SGX: C52) is a transport company with operations mainly in Singapore, Australia, the United Kingdom, and China. It’s the largest private taxi operator in Singapore and also the majority owner of vehicle and non-vehicle testing and inspection outfit, Vicom Limited (SGX: V01), and bus and rail services operator, SBS Transit Ltd (SGX: S61).

The company is facing structural headwind in its taxi business due to the rise of private car-hire firms such as Grab and Uber. As a result, its taxi business has been declining for the last few quarters.

Yet, the company has yet to give up in the face of competition. In fact, it has raised the stake recently by offering a reward program and reporting illegal practices by private car operators.

Reward program

According to an article by Straits Times, Comfortdelgro is encouraging public transport users to use ComfortDelGro taxi through programme called CabRewards+.

This program, which is an extension of the existing CarRewards programme, rewards users with points that can be used to redeem taxi vouchers, discounts on taxi bookings or free transfers to the airport, among other things.

The appeal is that it doubles the number of points earned compared to the existing programme. In other words, users can now have twice the benefits.

Target illegal practice of private car hire

Another action taken by Comfortdelgro recently is to instruct its drivers to report any illegal practices of private-car drivers such as pulling up at taxi stands.

Cabbies were told to report the infringement with photographic evidence of the private vehicles with number plates clearly shown together with date, time and location of the incidences.

For Comfortdelgro’s investors, the latest tactics might be seen as favourable, since the company is reacting to the competition from private hire.

Yet, the question is whether such moves will materially change the competitive landscape?

Here, the reward programme would likely have some positive impact in improving customer volume.

Yet, investors might want to reserve judgement for now, since these programme, if successful, might result in lower margins for the company. As such, it will be useful that investors evaluate the effectiveness of this programme in the coming quarters.

As for the target on private car hire, this might also have some positive impact in the short term. Nevertheless, they could be short-lived, since consumers and private car drivers will find other ways to overcome that. After all, it’s all about the price and the convenience!

Conclusion:

So is it too late for Comfortdelgro to fight back? Personally, the answer is its better late than never.

But we might see the disruptors retaliating with their own tactics, soon. One thing we can be sure of, consumers like us could benefit as a result of the competition.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.The Motley Fool Singapore has recommended shares of SBS Transit. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.