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How Lyft plans to woo drivers from Uber

Last Updated Nov 16, 2017 at 9:28 am EST

Ride-sharing company Lyft announced this week it would launch in Toronto by the end of the year — the company’s first foray outside the United States since it launched in 2012.

Now, the push is on to lure drivers to the platform as the company prepares to battle Uber, which has been operating in Toronto since 2014.

“This is a good thing for consumers and for drivers,” said Sunil Johal, policy director at the University of Toronto’s Mowat Centre. “It gives both of them more options in terms of either taking trips or operating rides, and more competition is going to mean both Lyft and Uber are going to be competing for eyeballs on their apps.”

To that end, Lyft has offered its first 3,000 drivers a 25-per-cent bonus on all rides for the first three months, as well as a $200 bonus for referrals.

Johal said the company will also likely offer heavily-subsidized rides and coupons to passengers at the start, as it tries to establish its brand.

Uber, meanwhile, will not only need to offer discounts, but it will have to counter the negative publicity from corporate scandals, attempts to evade regulators and its “fairly toxic” corporate culture too.

“That distinguishes the two right off the bat,” Johal said. “Uber for many people doesn’t necessarily bring about a positive impression anymore. Lyft has largely avoided that type of negative publicity to date.

“You’ll probably see a lot more warm and friendly marketing from Uber to try and show people it’s worth sticking with them rather than trying the new competitor.”

It seems Lyft is capitalizing on that disparity. It was the first ride-sharing company to introduce tipping and Its drivers tend to make a little more money — which could account for the fact that three-quarters of its drivers are happy working with the company, versus one-half of Uber drivers

“We know that by treating people better — whether that’s drivers, riders, or regulators — we make the entire Lyft experience better for everyone involved,” the company said.

And though Uber has a bigger share of the ride-sourcing market in the U.S. — 75 per cent compared to Lyft’s 22 per cent — its share has been dropping over the past 12 months or so.

Uber insists Lyft coming to Toronto is a good thing.

“At Uber, we welcome competition that encourages the use of more transportation alternatives,” a spokeswoman said in a statement. “More options can help reduce congestion and pollution as consumers increasingly make the switch from driving their own car to using shared mobility services.”

But Johal said another ride-sharing company in the city could cause problems.

“This is certainly a continuation of bad news for existing cab companies,” he said. “They’re continuing to see their business model erode.

“There is a risk that people aren’t really talking about and that’s the average commuter in Toronto might actually just see more congestion on the street as we see more of these apps come to town.”

Johal said there’s evidence people who use ride-sourcing platforms like Lyft and Uber are often taking trips they wouldn’t have otherwise taken — they might have taken transit or walked.