Ride-hailing app provider Grab’s offer to buy SMRT’s taxi business has sparked the interest of at least one other bidder which is looking to enlarge its presence in Singapore’s burgeoning cab industry.
Diversified motor group Prime, which has taxis as well as private-hire operations, is keen to jostle for SMRT’s business too.
Prime chairman Neo Nam Heng said: “We’re definitely interested, but the question is how much they are willing to sell at.
“When we bought their (SMRT’s) car rental business, it was making losses. By the second year, we made it profitable.”
He was referring to Prime’s $13.5 million purchase of Tibs Leasing from SMRT in 2003.
Prime is Singapore’s smallest taxi operator, with a fleet of 704 as at end-February.
SMRT, the third-largest operator here, has about 3400 cabs. SMRT’s taxi business has largely been loss-incurring since it started in 1990. It began to turn around only in recent years.
Prime said Grab had made a similar offer to buy its taxi business some time last year, but “we did not want to sell”.
“We want to grow the business,” Mr Neo said.
Asked to comment on the sale, SMRT chief executive Desmond Kuek said: “We have a very good partnership with Grab, with Strides, our private-hire services, as well as our taxi business. And we continue to look for all kinds of ways to partner and cooperate with them.”
SMRT’s sale talks with Grab – which supposedly include its Strides private-hire and Bus Plus premium bus operations – hinge on the buyer agreeing to hire all affected employees.
Grab, however, is said to be uninterested in increasing its headcount. It declined to comment.
The National Transport Workers’ Union was also unavailable for comment on the issue.
Commenting on Grab’s bid for SMRT’s taxi business, Trans Cab, the second-largest cab operator here, said the sale would be a positive development.
“Even though it is relatively new, Grab seems more familiar with the taxi industry and issues faced by cabbies,” Trans Cab managing director Teo Kiang Ang said.
Asked if he would make an offer for SMRT’s fleet, Mr Teo said: “It’s not a vehicle issue, but a driver issue.”
He was referring to the whole taxi industry being short of drivers as more migrate to driving private-hire cars. Other industry observers have ventured that consolidation would be inevitable in the cab trade.
Economist Walter Theseira from the Singapore University of Social Sciences said: “The market is naturally unstable with more than one major player.
“This price competition between Uber and Grab is great in the short run, but is likely to lead to longer-term problems.”
And as the market evolves, Dr Theseira said, the regulators have to be even more watchful.