Grab’s entry into taxi market allows it to gain reliable supply of drivers, vehicles: Experts (2025)

SINGAPORE - Grab’s foray into the taxi market is a means for it to reliably increase its driver and vehicle supply, but it needs to put more than the minimum 800 taxis on the roads to meaningfully increase availability for passengers, experts said.

On April 2, GrabCab – a subsidiary of Grab’s rental arm GrabRentals – was awarded a 10-year street-hail operator licence effective on April 9. It will become Singapore’s sixth taxi operator.

Associate Professor Walter Theseira, a transport economist at the Singapore University of Social Sciences, said Grab’s entry into the taxi market is a way to secure a reliable supply of drivers.

Taxi drivers, he said, are more committed to fulfilling their shifts compared with private-hire car drivers, who tend to be engaged in other activities. Cabbies generally tend to stay in the trade longer than those driving private-hire cars, he said.

While Grab said the move in part positions it to cater to consumers who prefer street-hail rides, Prof Theseira believes the company is “not interested in street hail (rides) under the current business model, where platforms and taxi operators do not earn any commission”.

At present, Grab earns a commission from its drivers for each ride booked via its app.

Dr Timothy Wong, an economist at the National University of Singapore, said Grab may be entering the market to secure a larger pool of vehicles that it will be able to use across both its ride-hailing and street-hailing services.

“This is an interesting departure from the typical operation strategy of ride-hailing firms, which tend to be asset-light,” Dr Wong said.

Dr Samuel Chng, research assistant professor at the Singapore University of Technology and Design, said Grab would likely have to introduce significantly more taxis than the minimum of 800 required under the licence, to increase the availability of cabs on the roads.

Singapore’s taxi population has nosedived from its peak of 28,736 in 2014 to 13,000 units as at January.

The authorities have taken steps to try to stem the decline, as taxis remain key at high-demand locations, such as airports and ferry terminals.

Grab’s background as a technology company, the experts said, will likely differentiate its taxi operation from the incumbents.

Mr Li Jianggan, chief executive of venture capital and research firm Momentum Works, believes that Grab will introduce new solutions that can, in turn, spur the industry to improve.

For example, he said, Grab may be able to optimise routes for drivers so that they can be deployed to areas with higher street-hail demand, boosting their earnings.

Among measures announced in March, taxi companies can now convert used vehicles under five years old into taxis, subject to approval from the Land Transport Authority (LTA).

This means that, if the vehicles comply with LTA’s requirements, part of Grab’s existing fleet of private-hire cars can be converted into taxis.

Asked to comment on Grab’s move into the taxi market, ComfortDelGro, Singapore’s largest taxi company, said competition is a natural part of market dynamics.

“We will continue to build up our ecosystem, driver benefits, and adapt our strategies as necessary, to ensure we remain a leading provider of taxi services in Singapore.”

Mr Neo Nam Heng, chairman of diversified motor group Prime, which owns Prime Taxi,said many drivers who join new taxi companies such as GrabCab will likely be from the existing operators, so the overall supply of cabbies available will not increase significantly.

Ms Jasmine Tan, general manager of Trans-Cab, said it is too early to comment on the impact of Grab’s move, but she believes that ultimately, cabbies want competitive taxi rental rates.

Passengers who spoke to The Straits Times had mixed reactions to GrabCab’s entry into the market.