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Lockdown to Hit Mobility Startups with the Debt Repayments

The Indian government again extended the lockdown across the nation until May3. Due to the extension of lockdown urban mobility startups such as VOGO, Drivezy, and Zoomcar have land-in to repay the debts which they have taken for the procurement of vehicles from the non-banking financial companies and private banks.

 

Shared mobility startups are usually financed to provide service on a short-term debt. Due to the COVID-19 pandemic people have changed their behavior and have become more health concerned. They will prefer either a safe commute or skip the travel plan for a specific period of time. This may affect the mobility service and hamper the revenue growth.

 

Shared mobility startups such as Zoomcar, VOGO, and Drivezy took the loan to finance the vehicle. However, in cab-service platforms such as Ola and Uber, drivers take the loans for the vehicles and pay EMI. The drivers have loans on their accounts, thus the company can cut back the asset to repay the unpaid loans.

 

An authorized person from Drivezy states that due to the COVID-19 pandemic lockdown extension across the nation the travel segment has completely fallen down and is showing zero growth. The spokesperson further added that the decrease in demand for short-term rental vehicles will last for sometime even after the lockdown is exited. This will react to the increasing demand on the weekly and monthly basis as people will find the safer mode to commute or skip the traveling plans for a specific time period.

 

From the sources, in March the mobility-based startup has been constantly experimenting revenue models such as franchise, subscription, and the launch.

 

Drivezy further concluded with the statement that over 40% of the assets are serviced through debts. The startups can pay their EMI payment to their financer within the next six months.