Are Grab, Uber threatened by Singapore's car growth freeze in 2018?

What does LTA's announced zero car growth really mean for Grab and Uber?

Grab recently announced its new US$700m investment to grow its car fleet in Southeast Asia, while Uber continues with its expansion plans in the region. Following the announcement of the Singaporean government to reduce car growth across the state to zero by 2018, what does it really mean for the two ride-hailing services?

Earlier in the week, the Land Transportation Authority (LTA) publi cised its plan to cut down the number of vehicles, including two-wheeled means of transport, plying the highways of Singapore starting in February 2018. This means there will be no more new certificate of entitlements (COEs) to be released around the time.

Also read: Amid LTA's zero vehicle growth announcement, car cost to go up soon

"Today [October 23], 12 percent of Singapore's total land area is taken up by roads. In view of land constraints and competing needs, there is limited scope for further expansion of the road network," reads the announcement.

For existing car owners approaching expiration, they will be forced to renew their certificates for their old cars; otherwise, they will have to go through another stringent process of securing it without a guarantee of getting one. For those who wish to get a new car, they will have to fight for the remaining COEs available and will most likely be more expensive next year or even before the target date, traders believed.

The announcement, however, bodes well for Grab and Uber. Both the public mass transportation and ride-sharing industry are expected to largely benefit from this scheme.

Jochen Krauss, the managing partner at global consultancy firm Simon-Kucher & Partners, tells Tech in Asia that advantage goes in favour of Grab, Uber and the bike-sharing services.

"Many more people will rethink if they want to own a car or not," says Krauss.

Also read: Grab gambles US$700m for rental scheme expansion

Grab Singapore head Jay Kell Lim tells the publication of the Southeast Asian unicorn's stance over LTA's decision, noting the obligation of ride-hailing services to make personal cars into shared assets as many as possible.

"Grab will continue to maintain strong utilization rates while growing our fleet meaningfully within LTA's quota," says Lim. "We believe the primary responsibility of ride-hailing companies is to convert as many personal cars into shared assets, so that more people may benefit from the increased convenience and accessibility of point-to-point transportation services, as opposed to operating a car rental business which leads to an oversupply of unutilized vehicles."

Also read: Does Uber spying on Grab in Singapore count as desperate move?

Uber, on the other hand, stresses its core ideology in the city-state is in accordance to LTA's vision to make Singapore "car-lite".

"Together with great public transport, ride-sharing platforms like Uber can create a credible alternative to private car ownership by allowing people access to a safe, reliable, and affordable ride wherever they are in the city," says an Uber spokesperson.

Krauss notes shared services in the country will continue to thrive in the course of time, especially in an economy of limited supply.