Australia / Industry Insights
Ridesharing has Grown Massively in Australia

What information do you want to see from IBISWorld on COVID-19? We'd love to hear from you

by James Thomson
Oct 14 2018

Australians have increasingly embraced ridesharing services over the past five years. As consumers have sought convenient and cost-efficient inner-city transport, industry operators have expanded their operations, launching in new cities and increasing their active user base. Industry revenue is expected to grow at an annualised 130.5% over the five years through 2018-19, to reach $286.3 million.

“Ridesharing service providers have been benefited from growth in technology adoption and advances in mobile technology, which have made their platforms more accessible to consumers”, said Senior Industry Analyst James Thomson.

Operators in the Ridesharing Services industry develop and operate online platforms that connect drivers and passengers to provide on-demand passenger transport services. Drivers in the industry operate as independent contractors. These platforms are typically accessed through smartphone apps. The industry excludes taxi companies, such as 13CABS, that provide taxi-booking services through smartphone apps alongside their traditional taxi operations. The industry also excludes UberBlack and online booking systems for hire cars and professional owner-drivers, such as chauffeurs. These services represent external competition for the industry. The on-demand nature of ridesharing services and improved usability of industry platforms have boosted industry demand over the past five years.

Rising IT and telecommunications adoption is expected to continue providing a tailwind for the industry over the next five years, while population growth and increasing urbanisation are anticipated to increase the potential number of users for ridesharing services over the period. As ridesharing services becoming generally accepted, industry operators are likely to seek new customers through entering new geographic areas. While the industry largest company, Uber, already operates in each Australian state and territory, other major players, such as Taxify and Ola, only operate in a few capital cities, such as Melbourne, Sydney and Brisbane. These firms are likely to develop their operations in other cities and regions around Australia over the next five years to increase their user bases.

The legality of ridesharing has been a key issue for the industry over the past five years. Ridesharing services were first legalised in the Australian Capital Territory in October 2015. The Northern Territory was the last Australian government to legalise ridesharing services in 2018. The varying degrees of legality across Australia presented a strong barrier to entry for the industry. The industry is also highly competitive. Internal competition among industry will likely remain strong over the next five years, leading to price competition that will limit industry revenue. The legalisation of ridesharing service may also attract some major foreign ridesharing service providers, such as the United States-based Lyft or Singapore-based Grab, into the industry over the next five years. The entry of these global firms would place pressure on companies with less capital and those vulnerable to price competition. Ridesharing providers will likely have to continue engaging in discounting to attract customers and take smaller commissions to attract active drivers to their ridesharing platforms, as both users and drivers have low switching costs.

Industry operators will continue to develop and expand their product offerings over the next five years. Uber has already begun to offer more niche transport services, such as UberASSIST, which provides additional assistance to passengers with disabilities. Other firms are likely to introduce similar additional services over the next five years, providing an opportunity for industry expansion. Industry revenue is projected to rise at an annualised 13.7% over the five years through 2023-24, to reach $543.2 million.

Want more industry stats and insights?

Preview Ridesharing Services in Australia