Challenges of a Private-Hire Driver in Singapore

Providing private-hire car services through a mobile app was a brand new concept that entered Singapore in 2013. It created a big fanfare back then as companies such as Uber and Grab dangled massive incentives to get drivers to sign-up with them.

6 years onwards, there have been massive changes to the industry. Life as a private-hire driver is not as rosy as it was before. There are many challenges that a private-hire driver in Singapore face these days.

Income Uncertainty

Reducing incentives

Grabcar incentive
Grab incentives from the past

Incentives were the biggest bait to encourage drivers to complete more trips. In the early days, income from incentives often outweighs the income from the fares.

Incentives have been steadily falling and might eventually disappear as companies gain bigger market share and control of the drivers. Grab has started to take away many key incentives from drivers such as earning guarantee and off-day subsidies. These days, drivers must drive more to make up for the loss of incentives.

Indirect competition

Private-hire drivers faced new competition of their own in the form of hitch social carpooling services. Hitch services were provided by private-car owners who do not require a PDVL, commercial insurance and an ugly blue decal on their windscreen.

Besides using GrabHitch and Ryde mobile apps for matching, many private-car drivers and riders have been creating Telegram group chat solely for the purpose of finding someone to hitch.

These hitch services are generally cheaper than private-hire car services. Riders are not subjected to dynamic surge pricing and drivers do not have to pay a commission when they self-match on Telegram group chats.

image – LTA

Private-hire drivers also have to compete with foreign talent providing illegal cross-border ferrying services in their Hyundai Starex and Toyota Innova.

High Operating Cost

Car rental and Petrol 

The cost of car rental never seems to go down even though there is a surplus of private-hire car siting in carparks all over Singapore. You cannot really blame the car-rental companies though, the exorbitant cost of car ownership in Singapore makes it impossible to rent it out cheap.

Petrol cost is always increasing but our fares are always going in the other direction. Period.

Insurance

Drivers who buy and use their own vehicle for private-hire purposes are required to insure their vehicle with private-hire Z10 motor car Commercial insurance. There is a premium for Z10 insurance compared to normal car insurance.

Many people blindly pay for their expensive Z10 car insurance policy when they receive the renewal notice from the insurance company without even comparing.

At Firstlane, we have tied-up with a leading insurance broker who can provide you with the most competitive quote for your car insurance at ZERO cost guaranteed. There is no obligation! Get a quote before you commit to your insurance renewal.

Personal Benefits and Prospects

Different people drive private-hire for different reasons. Some need the flexibility of time for their other needs while some others drive it for extra income.

What future?

Private-hire Drivers understand the fact that there is no prospect in driving private-hire. There will be no path for career progression, you will still be a driver after driving for 10 years.

Your income is unlikely to increase as fares will likely to remain depressingly low. There is low-barrier of entry to getting PDVL, meaning every year you will see more people getting a licence and competing with you for the same number of riders.

No CPF but must pay Medisave

image – CPF

As a self-employed, you are not required to contribute 20% of your monthly income to CPF. Hooray! But you got to contribute to your Medisave every year if not you will have difficulty renewing your licence! Private-Hire drivers can pay up to $7560 in cash to top-up their Medisave every year.

One can die but cannot fall sick or go on leave

There is a famous saying about living in Singapore. One can die but one cannot fall sick. As a self-employed Private-Hire Driver, you are thinly covered by the benefits from the ride-hailing companies.

Unless you are willing to pay a premium for the additional insurance plans that these companies sell to you, there will be no income for you during the days that you are sick or when you go on leave. Worse still, your operating car cost such as rental and car park are still ongoing when you are not driving.

It is really not easy to be a private-hire driver in Singapore these days!