The number of taxis operating per day in Dubai?

Guesstimate Market sizing
Recent activity on Mar 15, 2018
6 Answers
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Anonymous A asked on Feb 21, 2018

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Anonymous B replied on Feb 21, 2018

I approached the question in two steps: 1) Demand side 2) Supply side

1) Demand

Step 1) Population of Dubai is approximately 3m

Step 2) I divided the population in different age groups, as my assumption was that the people between 20-59 years in Dubai would travel much more frequent by taxi as 0-19 and 60+:

I assumed that 0-19 and 60+ account for 20% --> 600k
Thus, 20-59 accounts for 80% --> 2.4M
(I argued that Dubai is very business driven and thus has a higher focus on the middle age groups; I assumed the other groups to be both 10% --> looked it up, it seems to be more like 19% (0-19) and 2% (60+))

Step 3) Precentage of taxi users per day (assuming no own car, other vehicle, need present):

For 0-19 and 60+: 2% --> 12,000

For 20-59: 15% --> 360,000

Step 4) Rides per user

For the 0-19 and 60+: 1 ride --> 12,000

For 20-59: 1.25 --> 450,000 (assumed that one out of 4 people would take a taxi twice a day)

+ Foreign business travel: Here I assumed a need of 10% rougly --> c. 40,000

Total: approximately: 500,000

Step 5) Day/ night rides:

Day (8-20h) I said it accounts for 2/3 of rides --> 333,000 and then I assumed a peak hour that is 1.5x what a uniform distribution (27,800) of rides would be --> c. 42,000 rides

Night (20-8h): 166,000 rides distributed uniformly --> 13,800 rides

2) Supply

Step 1) I made the assumption that a taxi driver could serve on average 3 rides per hour taking into account longer rides, waiting period, but also short rides

3) Demand + Supply

Day demand (determined by peak hour): 42,000/3 = 14,000

Night demand: 13,800/3 = 4,600

Therefore, I came up with 18,600 taxis operating in Dubai per day (taking into account the day + night shift change)

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Anonymous replied on Feb 21, 2018

Usually easier to tackle these Qs via the demand side:

Assumption: this is a working day, not weekend.

Total population of Dubai = 3m (you can ask this)

How many of them travel daily: Office going, school going, other activies e.g. shopping.

Lets say it is some 2/3rd of the total populace (the rest 1/3rd mostly stay-at-home parent/v. young kids/ill or sick people/retirees, etc.) = 2M people leave home daily.

Segments of people travelling from different modes of transport-
1) Own vehicle - 25%

2) Train - Lets say only 10%

3) Bus - 15%

5) Lets give 0% to others, e.g. motorcycles (too hot for the city)

6) Now we are left with: 50% = 1M = all for taxis.

7) Given dubai is touristy, let's add a small 10% of rides to the final answer at the end.

So, total people taking rides = 1.1M / day.

Now , lets assume, a taxi takes 30 trips in a working day (an avg - 20min / ride including hop-on/hop-off, 10hr working day for drivers = 30 rides per day) , and one trip has approx 2 persons (some travel alone, some in groups of 3–4 , so taking an avg of 2)

So one auto serves for 2*30 = 60 persons / day .

So number of autos needed per day = number of ppl travelling by it per day / no of ppl served per auto

=1.1mn/60

=18K taxis in operation.

I googled it up and the right answer seems to be around 10-12K. Not too bad.

Hemant

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Ifeanyi on Mar 15, 2018

I have question about the populace in respect to the 10% tourists: Doesn't this get factored under the total population?

Vlad
Expert
Content Creator
replied on Feb 21, 2018
McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School

Hi,

Agree with Hemant and disagree with Anonymous,

If you divide the total demand by the rides per hour per driver you incorrectly assume that riders are available 24 hr per day.

The correct way is to calculate the number of average rides per driver per working day and then divide the demand by this number.

I would also mention several other factors that may influence the number of drivers:

  • Since it's Dubai, it has a lot of premium and luxury taxis with very low utilization (20-30%) but high average check
  • The completion rate for taxi rides is not 100% since the taxi is not always available in the area. People switch to public transport
  • If it was not Dubai I would say There is seasonality (snow, rain)
  • There are peaks and off-peaks in the demand during the week as well (weak day / weekends)

Best,

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Anonymous C replied on Mar 15, 2018

I'm a bit curious about what guides the transport medium dsitribution or population number. I assumeda lot as I do not know pretty much about Dubia so my values go much less than what I discovered on google. My approach:

Focusing on the potential demand side:

Step 1.) Start with Dubai Population = Assumed 3M(million)

Step 2.) I assumed a section of the population i.e 25% stay at home during a typical day. This leaves 2.25M commuters.

Step 3.) Break down the commuters according to the mode of transport: I considered transport on foot(2%), by own vehicle(18%), by train(20%), by bus(20%),by bicycle(20%), by taxi(20%). - This is my first area of concerns: with little or no knowledge of the location, is an almost equal modes of transport ideal?). This leaves the potential commuters by taxi at 450,000 people.

Then I considered the supply side:

Step 1: Break it down as a function of total hours during the day/average ride time per taxi. This would give the value of number of times a taxi operates in a day.

Step 2.) I split the total hours at 14h during the day (from 5a.m - 6p.m) and 6h(7p.m - 12a.m). I left out 4h (12a.m- 5a.m) as I assumed no taxi at this time.

Step 3.) with each of the individual period of the day hours, I assumed an average ride time of 10mins day and night). With my calculations I obtained total ride times of 120 times per taxi (i.e 14*60/12 + 6*60/12). 60 as in 60 mins.

Step 4.) I considered the 4 seats in each taxi and assumed that each taxi carrys 3 persons in one ride.

Total number of taxis operating per day in Dubia : Total number of taxi commuters/ (ride times per taxi * average number of people per taxi)

equals

450,000/(120*3) = 12,500 taxis.

On google its about 9,000taxis

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B
Expert
replied on Feb 24, 2018
NOT AVAILABLE

Hey anonymous A,

I believe this is a really great example on how someone could use different approaches to solve the same case. In fact, I think that the biggest difference between the 2 approaches is just in the assumptions: while anonymous B assumes that one taxi can run for the entire 24h period (not that the same driver does that, only that the taxi can do it; it's quite normal in several countries for a taxi to be driven by 2/3 different people during the same day to optimize taxi usage/capacity); the other approach assumes that one driver can only work some hours per working day and that the rest of the day the taxi is going to be unused.

I think it would have helped to clarify this type of assumptions upfront!

Best

Bruno

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Andrea
Expert
replied on Feb 25, 2018
Former BCG Principal and decision round interviewer

Would take a cut off the top of Hermant’s reply due to car sharing services; that would bring it closer to reality.

andrea

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