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Grab: Price spikes due to higher demand, not absence of rival | BusinessMirror

PRICE increases in Grab were borne out of the dearth in supply and increased demand, and not because it had no one to compete with, a company official said, belying the government’s claim that Grab had jacked up its prices due to its virtual monopoly in the ride-hailing market.

Leo Emmanuel Gonzales, who heads the public affairs division of Grab, said the continuous surge-induced prices for rides—be it private car, pooled, six-seater, or premium—are a result of increasing demand for the service, as well as the lack of supply of drivers.

He underscored the need for at least 6,000 transportation network vehicle service (TNVS) operators—or peers—to drive prices down on Grab’s pricing system, known as dynamic pricing.

“We are of the view that any perceived increase in price is a not an exercise of any market power, but the result of demand and supply imbalance given the current shortage of available drivers and the regulatory constraint relating to the TNVS cap, which are outside of our control,” he said.

Dynamic pricing scheme takes into account factors such as supply-demand ratio, traffic condition and length of ride in determining the fare.  It also puts in surges in areas where there is high demand and low supply.

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Grab: Price spikes due to higher demand, not absence of rival | BusinessMirror.