clock menu more-arrow no yes

Dubai-Based Careem in Discussions to Join Global Ride-Hail Alliance

Dubai-based ride-hail company Careem is in talks to join the world's largest global ride-hail alliance, which was formalized in early December of 2015.

pogonici / Shutterstock

Careem, a Dubai-based ride-hail company that has a presence in 26 cities across MENA and Pakistan, is in talks to join the international players that recently struck up a four-way anti-Uber partnership, Careem general manager Christian Eid told Re/code.

As it stands, the global ride-hail alliance includes Lyft, China’s Didi Kuaidi, India’s Ola and South East Asia’s Grab. If conversations with Careem — which are in the beginning stages — pan out, it will include key cities in Saudi Arabia, Egypt, the UAE and Pakistan.

Though Eid did not specify which companies Careem is specifically discussing the partnership with, Re/code has confirmed that Lyft is among them. A Grab and Didi Kuaidi spokesperson declined to comment. Ola did not respond in time for publication.

Though there were talks of an alliance for more than a year before, the partnership was formalized when China’s ride-hail behemoth Didi Kuaidi made investments in Grab, Lyft and Ola.

Careem, which raised a total of $71.7 million in funding, was founded in 2013 and first launched in Dubai as a corporate private car service. As the company expanded, Careem began rolling out private cars and, where required by law, limo-type services. As of January 2016, the company has seen a 30 percent increase in trips on a month-to-month basis and has seen profitability, though not consistently, in the UAE.

“The UAE has been profitable for quite some time,” Eid told Re/code. “We expect the rest of the markets to follow suit.”

But in newer markets like Lahore and Karachi in Pakistan and Alexandria in Egypt, Careem will be pouring its resources into winning over riders and drivers as well as rolling out new services. According to Eid, Careem is looking into providing a rickshaw service in Karachi, where there is an abundance of these traditional rickshaws.

“Karachi is really a rickshaw-driven city,” Eid said. “So we are exploring different means of transportation and we have to follow the trends of the market. No decisions have been made. [But] this is a product of our users asking us when we’re going to be doing rickshaws.”

For any on-demand platform to operate a rickshaw service of this nature, knowing how to effectively monetize cash payments is a must. According to Careem co-founder Mudassir Sheikha, since launching cash payments a year and a half ago this has been a primary focus for the company.

“More than 50 percent of transactions in Saudi Arabia and more than 80 percent of transactions in Cairo are cash-based,” Sheikha said.

To monetize the cash-payments, Careem manually collects commission from its drivers after the fact.

Monetizing cash payments is high on the list of priorities for the other players in the ride-hail alliance as well. Grab has a pre-paid credit system but Didi has largely struggled to monetize its cash payments. Partnering with local players with deep knowledge of the nuances of a market allows these companies both to pool the respective knowledge base of each company and to expand into new markets without the costs of physically doing so.

For Careem, the ride-hail alliance offers the company the unique opportunity to expand into Western markets that might otherwise be hesitant about accepting a company from the Arab world. With the alliance’s plans to roll out cross-booking between companies in the next few months — with which, for example, a Lyft user traveling in China can hail a Didi Kuaidi car using the Lyft app — Careem can reap the benefits of having a presence in markets like the U.S. without the hassle of marketing a foreign import.

According to Eid, Careem is well positioned to be a part of the alliance. For one, Uber is in almost every market Careem is in and just launched in Lahore two weeks ago.

“In Saudi Arabia, we are by far the market leader simply because we launched a method of payment that is used by 80 percent of the population exclusively,” he said. “In the UAE we’re [basically] neck-and-neck and in Egypt we’re ahead.”

According to Sheikha, the company has seen 70 to 80 percent increase in trips in Pakistan on a month-to-month basis.

Clarification: This article has been updated to include more accurate figures provided by Sheika regarding the percentage of transactions that are cash payments in Saudi Arabia and Egypt as well as the monthly growth in Pakistan.

This article originally appeared on Recode.net.