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Lyft Is Launching A Premium SUV Service

Lyft Is Launching A Premium SUV Service

This article appeared on Techcrunch last night: http://techcrunch.com/2014/04/28/lyft-suv/. The full article is quoted below.

[Update: you can sign up to be on the waitlist to be a passenger or driver for the new service. Their campaign is “Bringing the Magic to Premium.” You can sign up at http://get.lyft.com/magic/]

I believe there is a real demand for this type of service mainly during Friday nights and weekends were large groups of people want to go out. For Uber Black, most of the money is when you are doing Uber SUV where you can pick up both SUV customers and Uber Black customers. You essentially double (not sure what the breakdown is between Uber Black and SUV customers on any given night) your audience and can stay busier throughout the night. Uber SUV is also more expensive than Uber Black if you reserve a SUV so there is where the money is.

Lyft noticed that and is starting their own SUV service. I believe this one service will cater to both Uber Black and Uber SUV customers. There have been a few times every week where there were a group of five people that need a ride but most sedans can fit four extra people. Currently on Lyft, there is no way to reserve a vehicle that can hold 5 or more passengers. With this new service, they can. In addition, I would expect Lyft SUV (or VIP Lyft or Lyft VIP according to the article) to be able to pick up Lyft customers and customers always appreciate a roomier car, especially with leather seats.

This can be a real competitor to Uber. They can market this alternative as being much cheaper than Uber as Uber Black and Uber SUV needs to have commercial livery plates and livery insurance, which adds a lot of cost to their services. Lyft will most likely not require it and be quite a bit cheaper than Uber SUV while retaining some of the luxuries of Uber SUV.

I have had a few former Uber Black/SUV customers saying how their service has dropped off dramatically in Boston within the past few months and they have converted to Lyft. I believe that this service may convince more of those people to try the new Lyft SUV service.

Here are the important bits from the article:

Lyft is preparing to compete with Uber’s upscale SUV option by launching its own on-demand premium SUV ride service, according to a source. It will let riders book leather interior Ford Explorer SUVS that seat a squished maximum of six passengers. Until now, Lyft has only offered a single tier of service on par with UberX in price, and that provides rides in a variety of vehicles.

[Update 4/29/14, 11:30am PST: Lyft has confirmed the plan for a premium service. It tells me SUVs will be part of the offering, but didn’t rule out other higher-end cars being included too. The company has referred us to this landing page titled “Bringing The Magic To Premium” and gave the statement “We’re all about creating special experiences with the help of our incredible community of drivers. I can confirm that a premium option is in the works, and today we’re opening up a waitlist for invites. We look forward to sharing more info on this project in the coming weeks.” Our transportation expert Ryan Lawler has more analysis.]

A premium service could widen Lyft’s customer base and make its brand classier. We’ve reached out to Lyft by phone and didn’t hear back, and have emailed requesting a comment or confirmation. We’ll update if we receive a response.

Our source says Lyft is convening the first round of SUV drivers this week in San Francisco, which will be the initial test bed for the new service. Drivers required to have white Ford Explorers that Lyft will have redone with interior leather, potentially by car shop West Coast Customs in LA or a shop closer to the Bay Area. Drivers are said to receive a $750 per month stipend in addition to what they earn driving, which may be more than regular drivers depending on how Lyft prices its SUV rides.

Uber SUVs in San Francisco cost a $15 base fare plus $0.90 per minute and $3.75 per mil with a minimum fare of $25. We don’t have details on pricing but Lyft might try to slide in at a slightly cheaper rate.

It’s important to note that while Ford Explorer claim to seat seven (including driver) thanks to its two back rows of seats, the rear row is much more cramped than the Ford Expeditions, Chevy Tahoes, Lincoln Navigators, and Cadillac Escalades that Uber SUV employs. Without the minimal-leg room back seats, Lyft’s Ford Explorers could be more on par with Uber’s Black Car service that features roomy vehicles clad with leather, but only seat four passengers. In the end though, if you have a gaggle of friends with you and want to go somewhere without splitting into two cars, the number of seats with seatbelts matters more than how comfy they are.

SUVs could bring a boost to Lyft revenue by creating a luxury option for its typical users who want the occasional fancy night out. The larger vehicles also be a helpful utility for moving big groups of people or cargo. SUVs could also directly attract more high-end customers who might end up using Lyft’s cheaper standard service when no one is looking. One thing our source isn’t sure of is the name of Lyft’s SUV service, but they speculate it could be called Lyft VIP or VIP Lyft.

Lyft raised a $250 million round of funding this month to bring it to over $330 million in funding since it started as Zimride back in 2007. This was likely to help it keep up in growth, operations, and marketing with Uber, which raised $258 million in August 2013. Experimenting with a premium tier could please investors looking for Lyft to cash in on a more diverse set of passengers.

I imagine the marketing plan could center around Lyft’s white SUV as a friendlier alternative to Uber’s more regal black ones. That would build on Lyft’s community-focused brand of “Your friend with a car” that contrasts with Uber, which calls itself “Everyone’s private driver”. Lyft SUV’s could aim to bring class and style without the guilt of having a chauffeur.

A monocle to go with its mustache.

 

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