As announced by the co-founder and CEO, Mudassir Sheikha, Careem will discontinue its cab-hailing service in Pakistan on July 18, and will stop functioning from September 18. A trendsetter in the competitive taxi market, Sheikha and his team revolutionised the ride-hailing business.
Launched in 2015, Careeem thrived for nearly a decade, creating countless jobs for registered drivers and providing safe rides for women in a conservative society.
While the cab-hailing services may be sunsetting, Sheikha claimed that Careem will take a different direction in Pakistan with the Everything App set to expand its footprint.
Intense Competition Drove Careem Rides Out of Business
In his announcement on LinkedIn, Sheikha also acknowledged the many reasons for shutting down Careem’s cab-hailing services. He cited intensifying competition in the taxi market as one of the causes.
The ride-hailing industry in Pakistan experienced a boom in the last few years, leading to saturation and intense competition. Careem has strong competitors like inDrive and Yango, which reduced its stronghold on the market.
inDrive operates on a bidding system, allowing users to find the cheapest and most affordable rides. Careem introduced the Flexi Ride Model to compete with this bidding system, but inDrive had already attracted many with its low fares.
Yango also offered discounted fares for its consumers, along with performance-based incentives for its drivers. During times of soaring inflation rates, cheap rides were the need of the hour, and Careem’s competitors excelled in this domain.
However, Sheikha also acknowledged that Pakistan’s challenging macroeconomic landscape and global fund allocation made Careem’s cab-hailing operations less profitable and feasible.
Drivers Preferred Careem Over Other Competitors
The bid-based model was attractive to customers, but riders felt it was a trap. Careem paid its captains better, but fewer users compelled drivers to switch to inDrive and Yango, which had more customers.
As some regular customers can relate, Careem had waiting charges, which were a justified benefit for drivers who had to patiently wait for customers. However, from a customer point of view, this was a disadvantage. This also caused them to leaned toward other altreatives.
While Careem is finding new ways of serving Pakistan, its contribution to the cab-hailing industry cannot be understated.
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