Have you noticed a decline in demand for rideshare? If so, you’re not alone. Are we seeing the effects of a typical summer slowdown, or is something worse happening behind the scenes? Senior RSG contributor Sergio Avedian recently went out to drive and had some of his worst earnings in the last three years. What’s going on?
I have been a veteran driver for over six years on both platforms. I have seen the great, the good, the bad, and finally the ugly in a recent July weekend.
What is going on? What I saw was more than the usual summer slowdown. At every corner of Los Angeles, there are more cars than in 2019, and the market is absolutely oversaturated.
The following are some screenshots from this weekend. We also talked about this in a video that went viral.
How could there be so many cars within a square mile considering high gas prices? Is this the start of desperation for drivers who need to put food on the table?
Driving for base rates of 60 cents a mile and 21 cents a minute without incentives or surges will not be a profitable endeavor.
What it Looks Like for Drivers – Summer 2022
I was having fun driving and making the same amount of money ($50-60 an hour) last year as 2017-2018, but I knew it would not last. I was ready for Uber to cut incentives like Quests, Consecutive Ride Bonus (CRBs), Boost+, etc., which they have done, but I was not ready for this amount of oversaturation.
The surge that made Los Angeles red practically 20 hours a day is now replaced with pale white maps except for a few hours a day. Is the demand slowing down, or is it just the regular summer slowdown?
At RSG, we held our inaugural Town Hall meeting on July 12th, which was live-streamed on Show me the money club (SMTMC) with six drivers from major Uber markets.
During the interview process, all the drivers expressed similar concerns: this is the worst summer they have experienced in the last five years, and I believe it.
Surge maps have been replaced by pale white maps – this is not good!
We will know if this is a permanent case of the double whammy, meaning demand destruction due to the slowing economy and oversaturation. Since schools closed in Los Angeles, this is what I am seeing. Is it because all the college kids, teachers, and soccer moms decided to drive and make some extra cash? Possibly!
My “Ugly” Driving Results
I am not a glutton for punishment, but I still get out there and drive to experience the current situation in my city. I am disappointed that many journalists just cut and paste what they hear from Uber/Lyft’s Public Relations departments.
I call it the way I see it, and that type of no-nonsense coverage has resonated with many drivers out there. As a driver myself, other drivers feel what I write is based on facts. If I were not on the front lines, I would just be another mouthpiece for transportation network companies (TNCs).
I bought $60 worth of gas this week and decided to drive. As you all know, I am the Chairman of SMTMC, I only drive when I am offered incentives, and I will try to stack them all up to make the most money in the shortest time.
This strategy worked well for me last year, as I made the same amount of money in 2017-2018 – up to $65 an hour, and my Utilization Rate (UR) was over 95%.
What is UR? It is the Active hours divided by Online hours. So If my Active hours (starts after accepting a request to drop off) were 4.9 hours and I was online for 5 hours, my UR would be 4.9/5=98%. Here is an earnings statement from last year:
UR of 98%, $30 per trip average, $60 per Online hour, more per Active hour GROSS. Promotions made up over 38% of my total earnings since Uber was short of drivers and offered amazing incentives to get drivers back on the platform.
I was earning this amount of money by using the three Ps: Patience, Position, and Planning. Not only was I making money and being profitable, but I was having fun driving again. It was nothing like 2019 when rideshare had become a total grind. I was a very happy driver, but somehow my gut kept telling me otherwise.
My suggestion to all drivers is to use Uber and Lyft as a stepping stone to something bigger and better. Put away at least 50% of the money you make when times are good because if my experience has taught me anything, good times in this gig don’t last too long.
Not sure what to do after rideshare driving? Take a look at these options for life after rideshare.
Analyzing a Recent Weekend of Driving
As I mentioned above, I recently bought $60 worth of gas to go out driving. My car is not a hybrid but gets decent gas mileage, and it allows me to do Comfort rides.
I drove a total of 248 miles (door to door, including dead miles) and averaged 30 MPG.
Nothing like last year, but I ran my spreadsheet as I always do after each shift, and I was shocked. This may have been my worst week in the last three years!
Utilization Rate 64%, which is way below my average from a few months ago
- $26.70 per Online hour (Including promotions and tips)
- $41.75 per Active hour (Including promotions and tips)
- $15.10 per trip
- 24% of earnings from Promotions (Including a 20 for $40 Quest)
- $1.64 per mile (All driven door-to-door miles)
After deducting just the gasoline expense (before maintenance, depreciation, insurance, car payment, taxes, etc.), these are my numbers:
- $22.75 per Online hour (Including promotions and tips)
- $35.60 per Active hour (Including promotions and tips)
- $12.85 per trip
- 30% of earnings from Promotions (Including a 20 for $40 Quest)
- $1.40 per mile (All driven door-to-door miles)
Earnings after taking the 62.5 cent IRS deduction:
- 248x.625=$155.00
- $407.00-$155.00=$252.00
- $252.00/15.25H=$16.50 per Online hour (Includes promotions and tips)
- $252.00/9.75H=$25.85 per Active hour (Includes promotions and tips)
Takeaways for Drivers
It is bad out there! Either demand is slacking, or it is a combination of the summer slowdown with an oversaturated marketplace.
Even late last year and until the end of March, I could make good money on the weekends. There were days that I could not turn my app off fast enough (before the coffee cup showed up on the app) to take a break.
On a recent weekend in Los Angeles, I waited almost 20 minutes between each trip. This may also be the result of my cherry-picking, but is there a reason why not to? Is there a reason to accept every ping and drive for peanuts? I wonder what my numbers would look like if I accepted every ping from near or far.
Uber CEO Dara Khosrowshahi mentioned that drivers were making $39 per Utilized Hour (on the way to the passenger and wheels turning with a passenger in the car) on average in the US during his Bloomberg interview. He didn’t mention what city, which hours of the day, etc.
He may be right, but what good are Utilized Hour calculations for the driver when my UR is 64%? Uber and Lyft both use only Active hours when they mention driver earnings. Is this intentional? Of course, it is!
During interviews, Uber and Lyft’s PR folks, including CEOs, are rarely pushed when they make outrageous claims. I guess the extra six hours I spent online idling and waiting for trips does not count in their books.
I also bet that if things are this slow in Los Angeles, they may be much worse in smaller cities. I got a ton of pushback when I posted my earnings in my articles last year, sometimes deservingly so because I am in one of the largest/busiest markets for Uber.
Well, I had the worst results in three years. How are things in your city? Please, comment below.
In July, we had our inaugural Town hall meeting with six drivers from Uber’s largest markets. I hope to have another one soon, as I want to create a forum where drivers can voice their opinions without recourse and feel free to express themselves. I want to build a driver community where we can exchange ideas freely.
That is what we need, not just complain about things that are not in our control, there is power in numbers. Welcome to the SMTMC (Show Me The Money Club)!
-Sergio @ RSG
