There is much good to be said about autos in Mumbai. They are generally available in plenty at all times of the day. And to a lesser extent even in the middle of the night. They generally charge by the meter, which is more than can be said about Delhi or Bangalore. And they (again generalizing here) have a more positive attitude towards their passengers and humanity at large than their brethren in other metros.
But at the end of the day, they are, like all of us, slaves to economics. While I am in India, I often take an auto from our office back to the guest house in Malad which is less than two kms away. For reasons that we will explore further, I have to ask an average of a dozen auto wallahs before one of them agrees to take me to my destination. In the process you learn many important life lessons. For instance, how to take rejection well (Chin up, move on to the next auto). Or why you shouldn’t take some things personally (He likes you, just doesn’t like where you’re going). Although the looks I sometimes get when I ask the question “D-mart jaoge” don’t make me feel loved. Some don’t even bother with a response. They just look away. You just know they are saying to themselves “Kahan, kahan se uth ke aa jaate hain!”
Although, all this is character-building and all that, I decided to go a little deeper and look at the economics of this. I am sorry to say that I don’t have a solution for the problem. But still here goes…
An auto wallah’s decision whether to take a passenger or not depends upon many variables. Some are actually system constants like the running cost per km. Some depend upon the situation like the expected wait for a passenger at a particular location or the distance of the passenger’s destination. The only variables that can be changed by the administration are the meter fare per km. and the minimum fare. Interestingly, the time cost of an auto (the rental the auto driver pays the auto owner) does not matter. Nor do the driver’s own expectations of profit.
We define a variable called fare contribution per min (FC) which is the price per km. less the running cost per km. and assumes that the auto moves at a certain constant speed only (which is pretty close to being fact in this traffic!). In making decisions of “Wait or Ride” the auto wallah is basically trying to maximize total Ride time over the day.
This sounds simple. Price per km. doesn’t matter. It is simply a trade off between taking a short fare vs. waiting to get a longer fare. Keep making these trade-offs in order to maximize Ride time over the day.
But there are other complexities. A ride shorter than the minimum fare gives an opportunity to make a higher FC than for full fare rides. Also, a major wrinkle is that the auto wallah can always ride empty from a long wait location to a short wait location. When riding empty the FC is actually negative. In a city like Mumbai, where a low wait location is seldom far away, the relation between Ride FC and Empty FC is, I would guess, the biggest driver of passenger refusal. However, I couldn’t say if it was big enough to change behaviour if we raised the fare a little or increased the minimum fare. We’d need a lot more data to arrive at that conclusion. But my suspicion is that a fare increase will reduce but not eliminate passenger refusal. Of course, most people who travel to and from the train station and generally don’t face this problem would rather not see a fare increase, thank you very much. So the discussion is very academic. But it is nevertheless satisfying to know that my suffering is for a greater cause. By tolerating constant rejection, I support lower auto prices in Mumbai.
6 am pacific 
Basab: It seems that they do this economic analysis and also use it for furthering other ’causes’ such as hike in basic rates, and that is before they tamper with their meters (in Delhi, of course).
I thought the following by my friend Nikhil Pahwa, editor of ContentSutra, will amuse you:
http://www.mixedbag.in/2007/06/09/this-is-how-we-justify-cheating/
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Hi Basab,
I have always felt that the auto-wallahs in Mumbai are the best as far as client-friendliness and integrity in terms of sticking to metered rates go. Now i have validation from an impeachable source as well!
Interesting analysis you have embarked on…looks like soon you may be able to publish an Indian version of ‘Freakonomics’!
Anyways, wanted to introduce another variable to your otherwise economically sophisticated analysis – the auto-wallah also intuitively assigns a probability of getting a paid fare back from the destination and the amount of wait time from that place when you ask him to go there. So, sort of a combination of long vs short fare and a long wait vs short wait destination.
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Great analytical stuff of daily-economics!
Fortunately, auto-wallahs are equally client-friendly and they always stick to meters even in Ahmedabad!.
It is really a shame that auto-wallahs are not so in Delhi. I wish the NGO set out to change the scene succeeds in their efforts
http://www.zeenews.com/articles.asp?aid=390908&sid=ZNS&sname=
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Not very far away, this:
http://indianeconomy.org/2007/06/13/auto-rickshaw-pricing/
Interesting!
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Most Autowallah’s in Mumbai seem to be from outside of Maharashtra unlike Bangalore where they are mostly local.This may be one of the reasons for the ‘professional/friendly’ attitude of the Mumbai Autowallah’s in that, they may not have been able to form a strong lobby like the one in Bangalore and the fear of being punished for unscrupulous behaviour by the police is higher.
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“Kahan, kahan se uth ke aa jaate hain!”
I couldn’t stop laughing after reading the phrase.
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Basab,
I meant ‘unimpeachable’ source in my last comment…i am sure you gathered that 🙂 Careless oversight…
Rak
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Rak,
Maximizing Fare Contribution as a way to see this problem generalizes the solution. You correctly note that from point to point the auto wallah’s decision making is also determined by his expecations of what to expect at the next stop (distance and wait) but over a day he is basically trying to maximize FC. I actually started to model the solution the way you describe it and the equation quickly got out of hand!
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Tushar,
You are probably right about Bangalore autos. I have heard that the Bangalore policemen themselves own many autos. Once there are enough of them owned by policemen, effectively, all autos are immune. The policeman to whom you might complain as a passenger has to assume that the auto you are complaining about has a good chance of being owned by someone on the police force.
This is somewhat like the current subprime crisis. Sellers are offering CDOs for sale in a market where buyers don’t know which CDOs have how much of a subprime problem. Actually, it is a little worse. The buyers assume that the sellers know more than them and are hiding the problems in their CDOs. And so, all structured credit products – good and bad – become illiquid. No buyers. Martin Wolf has a great piece on this in the FT.
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Dear Basab,
I’m one of those fans of auto-rickshaw… the reason is its simply available whenever you want… From my personal experiences in Mumbai and Pune, I think, Ride FC and Empty FC also depends on the attitude of rickshawallahs. I did talk to many of them when I ride, just to kill the time and get some insight on their day to day life. I found that Mumbai rickshawallahs enjoy their work more (dont sue me for this – just observation from the data I had) so they will be ready to travel to any place as wait time (as compared to the one in pune) is less. The simple reason could be other rickshawallahs dont refuse much as well.
On top of this, I found, Pune Rickshawallahs normally expect to have some more amount apart from the fare on meter (this is especially outside the city region), so they dont go by meter always.
Third, normally rickshawallahs have their own areas. This implies if someone is not ready to accept any passenger, they will redirect to the other rickshawallah there (provided they are not in queue or other rickshawallahs dont mind). So being in their ‘own areas’ help reducing Empty FC too.
Does that make sense?
Lastly, I dont think, ONLY increasing the basic fare will help resolving this issue. Most of the rickshawallah dont have their permit to own auto (As there are limited permits and one need to pay atleast 40-50K to get the permit – not sure abt the official/ legal amount)
If we have more permits there will be more rickshawallahs which will bring more competition. This will help improving the service too. Here, I can accept more basic fare as there will be less rides for individual rickshawallah.
Warm Regards,
#! /Yogesh
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The below part may help understanding better –
Profit of Rickshawallah = Ride FC – (Basic Amt to owner + Maintenenace)
If we can not increase Ride FC, we can minimize/eliminate the Amt to Owner (if that rickshawallah owns his autorickshaw)
Then equation may look like –
Profit of Rickshawallah = Ride FC – (Loan EMI* + Maintenance)
* – Any deals on better EMI will help them earn more as well as more banks will have more cash flow (Dont knw how many banks will have promotional schemes to target this 🙂 )
Warm Regards,
#! /Yogesh
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Auto-wallahs in Chennai do not confuse themselves with all this math and logic. They keep it fairly simple. They take you where you want to go if you pay the fare they quote. And how on earth they arrive at that fare, God only knows. I only know that there is no portion of the fare that is a system constant; everything is variable.
I think they follow this very basic principle…’Customer is King (in his ability to shell out money). Hence extract maximum possible.’
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Man…this is interesting economics. I have always looked at the distance travelled and the cost set by the respective state governments per KM. However there could be other factors that may work…
One key factor could be…Most autos do not get the proper loans from the bank, hence they end up paying exhorbitant rates of interest and thus ask for exhorbitant rates.
I would like to comment on what Deepa has said. Auto meters in Chennai run faster than time. Hence it would be better off to pay what he asks for and then get out…. 🙂
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Just wanted to let you all know that, legally, the auto driver cannot deny taking you. If he does, you can drag him to a Traffic policeman and lodge a complaint. Of course, traffic policemen are not available everywhere, but if you see one, do take the auto-driver ant make him straight !
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Rickshaw & Taxi Drivers do not have a right to say NO (apparantly?). So remember that each time the rickshaw/taxi driver tells you a NO, take down his vehicle registration number , note the time , date and place and register your complain on the form in the url below .
We have had enough of these guys bullying us around, and refusing to ply specially when its urgent. They have been told that they cannot say a NO to any customer when their meter is FOR HIRE! not even for short or long distance .
All other types of complaints can also be filed on this form. It may be worth bookmarking the link or saving it on your mobile.
http://www.trafficpolicemumbai.org/Complaint%20Form%20aginst%20ART.html
well, use the form wisely. we know when it is necessary to lodge the complaint.
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I’ve just moved to Mumbai from Bangalore and man, is it refreshing to see my auto conversion rate go up. From a demand to go to “ok”, I have to do an average of 4-6 autos in Bangalore, on a non trafficky day, to a place in the center of town etc.
In Mumbai my average is around 1.5. It’s very rare I’ve gotten rejected, which is quite refreshing. Being a Bangalorean I don’t bat an eyelid if they mumble objections, I essentially give them the look which says “Teri *** ki”, and look for the next black-and-yellow. Here I have nearly that look plastered on my face and they immediately say “yes” and I instantly feel remorse for being such a cynical b.
One thing you’re saying perhaps is that you would pay more but the general junta would not. So would it make a difference to offer more? Say double meter? (for 2 km this will be like 12 bucks) It may make up for the driver apprehension of FC loss. For you the extra will always hurt in a little way (Could I have gotten away with lesser?) but for that I suggest you think about how many Euros this extra is and feel good. Not dollars because that will probably go up everytime you come here.
Might work?
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Deepak,
Funny comment! Yes, at the end of a tiring day, I will gladly offer twice the fare (aane aur jaane ka bhada). And yes, it makes it easier to think of the fare in dollars or euros.
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A very nice write up
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I turned a fan of Mumbai autowallahs, after I had some really bad experiences with the Bangalore autowallahs. My first week in Bangalore, I was charged everything from 45-105 rupees to travel to my office from the guesthouse 😀
Also, if you dont know even “swalpa swalpa kannada”, you’re defnitely duped!
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One thing you're saying perhaps is that you would pay more but the general junta would not. So would it make a difference to offer more? Say double meter?We have had enough of these guys bullying us around, and refusing to ply specially when its urgent.I agree with each and every recent conversation regarding the auto-rickshaws condition and strategies.
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The auto-wallahs of Mumbai are easily the best and most honest! Wonderful analysis… I kind of knew everything you were saying after a long conversation with an auto driver in the traffic jam. I was going to write an article about this but found your blog, now a link to this page would suffice 🙂
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