Satisfied drivers, reliable ridehailing

Lyft will open its own repair shops nationwide, to increase its reliability and profitability. The first shop opened in San Francisco, 34 are following this year in the USA. But will this be sufficient?

Now it has filed its IPO Lyft is looking for investors, but that means the company must prove its reliability and profitability. Both preconditions will also serve the companies and riders who want to implement ridehailing as a reliable commuting mode. Therefore, the company is working heavily on driver satisfaction, but is that enough?

Lyft Driver Services

To support its drivers, increase their satisfaction and hence the service’s reliability, Lyft created Lyft Driver Services. Besides repair shops where Lyft drivers will receive significant discounts on repair and maintenance services, the ridehailer will also introduce the Lyft Direct Debit Card. The Card will allow Lyft drivers to access more than 20,000 ATMs without paying a fee, unlimited fee-free pay-outs, and cash backs of 2% on petrol, and 1% on groceries and even discounts on certain dining locations of up to 4%. Lyft will also start introducing a number of language learning and education services for its drivers as from this spring. Another significant part of the programme are the incentives for drivers to switch to Geico’s all-in-one rideshare insurance policy. 

Deep discounts

The first repair shop already opened in San Francisco last week, and in the second half of this year more repair shops are set to open in major cities across the USA. However, the additional promise of free bank accounts would actually decrease the profit margin for the repair shops which could be used to give drivers better deals. Hence, the question remains how deep the announced ‘deep discounts’ will really turn out to be. 

Car maintenance and service is one of the biggest costs for its drivers. The Lyft repair shops aim to save up to 50% on the repair. To give some examples; at the repair shop in San Francisco, Lyft drivers will be charged $69.99 for a synthetic oil change, tire rotation and car wash, while labour on maintenance will be charged at $95 an hour.

In addition, the repair time will be cut by half by using a pitstop system. The repair shops will be organised following an assembly line system where cars can pull in, and four people get the tires off and replace them at the same time. This process will take less than 10 minutes instead of half an hour.

Driver reliability

So, why is Lyft suddenly investing in its drivers? Driver satisfaction is the crucial precondition of Lyft’s business model – as any other ridehailing company – it is their weak and their strong characteristic at the same time. 

Hence to convince investors and – companies or riders – of the reliability and profitability of its services, the company has to find ways to increase driver satisfaction. With regard to its recent IPO filing, Lyft has to convince investors to buy its stocks, despite the company’s losses of $911 million in 2018.

Currently, Lyft pays driver bonuses to sign up which can add up in competitive markets. Opening repair shops which offer discounts and the other advantages might be a more cost-effective way to improve driver satisfaction and retention. And as a result, increase the reliability and profitability of the ride hailer as a whole. 

Balancing benefits 

Good to know, other ridehailing services such as Uber offer additional advantages to their drivers as well, such as discounts on maintenance costs and banking cards. Yet, the services might serve the company more – especially considering its fleet of rental cars – than its drivers, who last week protested against the falling wages, precisely when Lyft filed its IPO. And competitor Uber? They are seeing the same struggle. 

So, it might not be obvious if the extra benefits of both companies could compensate the falling wages and keep driver satisfaction optimal in order to secure reliable ridehailing services.