Does BluSmart Make Money on Each Trip?
BluSmart is a cab service many of us in Delhi NCR region love. As daily users, my flatmates and I tend to have differing opinions on their profitability. I decided to do some 'napkin' math to figure out if BluSmart makes money.
Rahul Mathur
Now: Building @Insurance_Dekho Earlier: Founder @VerakInsurance (YC W21; acquired) Hiring for Eng, Marketing, Sales & Ops roles
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Does BluSmart make money on each trip?
— Rahul Mathur (@Rahul_J_Mathur) June 22, 2023
BluSmart is a cab service many of us in Delhi NCR region love. As daily users, my flatmates and I tend to have differing opinions on their profitability..
So, I decided to do some "napkin" math to figure out if BluSmart makes money: -
📊 I cut scope to:
— Rahul Mathur (@Rahul_J_Mathur) June 22, 2023
(a) "City Rides" biz(scheduled & intra-city rides)
(b) Basic vehicle - Tata Tigor & Express T
(c) "New" vehicles (i.e. EMI still being paid by BluSmart)
To make Math's easy - I took the "unit" level as a single vehicle & associated operating costs -
🤯TL;DR - BluSmart could actually be making GOOD money each ride assuming that:
— Rahul Mathur (@Rahul_J_Mathur) June 22, 2023
(1) Vehicle runs ~26 days a month
(2) Daily ~14 trips of ~11 to 15 kms (between 2 x 8 hr. driver shifts)
(3) "Rahul's cost assumptions" i.e. ₹19.5K EMI and ₹25K driver salary (I asked drivers) -
BluSmart could be making somewhere between - ₹1K to + ₹20K in Contribution Margin (per month) from each vehicle on the road.
— Rahul Mathur (@Rahul_J_Mathur) June 22, 2023
Below is the detailed model explaining the calculations of how BluSmart is making money on {certain} trips: pic.twitter.com/AsVkq7zhJn -
💡The key financial levers are:
— Rahul Mathur (@Rahul_J_Mathur) June 22, 2023
(1) Vehicle financing cost: This eats into margin fast.
- Hence, BluSmart signed an MOU w/ Tata Motors (lower fleet cost).
- Hence, BluSmart has signed a number of green loans (e.g. with IREDA - a Govt entity) -
(2) Mileage covered by vehicle: Check the model / screenshot; extensive vehicle use takes the margins from -ve to +10K!
— Rahul Mathur (@Rahul_J_Mathur) June 22, 2023
- Hence, BluSmart is pushing for scheduled rides / recurring rides; let's their algorithm optimize for vehicle utilization -
In my calculations, I have explained my sources for some numbers; linked here:https://t.co/O5FUF5n7FB
— Rahul Mathur (@Rahul_J_Mathur) June 22, 2023
Note: Not supposed to be comprehensive - it is merely indicative. I built it over 20 minutes - apologies for any errors. -
Naturally, the math for BluSmart's rentals business will be different. But, I'm quite excited by the prospects of the business!
— Rahul Mathur (@Rahul_J_Mathur) June 22, 2023
Maybe, in the future, I'll try to explain how the unit economics of BluSmart's other verticals operate - but the City Rides business is their core! pic.twitter.com/DtsXLCKtuV