Careem to Suspend Ride-Hailing Services in Pakistan Amid Economic Pressures

In a significant development for Pakistan’s digital economy, Careem—the Middle East-based ride-hailing subsidiary of Uber—has announced it will suspend its core service operations in Pakistan effective July 18, 2025. The move ends a nearly decade-long run for the company in a market it once helped transform with innovations in app-based transportation, digital payments, and mobility access for women.

Launched in Pakistan in 2015, Careem quickly became a pioneer in the country’s mobility space, revolutionizing the way people booked rides, paid for services, and experienced urban transport. The platform played a crucial role in making ride-hailing mainstream and empowering female riders and drivers, a notable cultural shift in the traditionally conservative society. However, growing economic challenges, intensifying competition, and limited investment capacity have ultimately led to the company’s exit.

In a heartfelt LinkedIn post, Careem’s co-founder and CEO Mudassir Sheikha said, “This was an incredibly difficult decision. The challenging macroeconomic reality, intensifying competition, and global capital allocation made it hard to justify the investment levels required to deliver a safe and dependable service in the country.” His words underline the broader struggle facing Pakistan’s startup and tech ecosystem, which has been under strain since 2022.

The departure comes as newer ride-hailing companies such as Russia-backed Yango and Latin America’s inDrive continue expanding into Pakistan’s major urban centers. These entrants offer low-cost models that appeal to price-sensitive customers, further squeezing Careem’s already thin margins. Their aggressive pricing strategies and lower operational costs have made them formidable competitors in an environment where consumer spending has plummeted due to high inflation and reduced purchasing power.

Careem’s exit is also reflective of global trends. Ride-hailing giants like Uber, Lyft, and Grab have all exited unprofitable markets or restructured operations to focus on deliveries, payments, and other adjacent services. Uber exited Pakistan in 2022, and Careem’s decision now completes the company’s withdrawal from the market. These decisions come amid rising operational costs, increased regulatory pressures, and tightening global capital, especially in emerging markets.

Pakistan’s broader startup sector has faced a wave of retrenchments and closures since 2022. As venture capital inflows slowed, inflation soared to record levels—peaking at 38%—and household consumption weakened significantly. Once-promising ventures such as Airlift, Swvl, VavaCars, and Truck It In have either shut down or scaled back, unable to survive the double blow of local economic woes and a global tech funding winter.

Careem’s contribution to Pakistan’s mobility and tech scene cannot be overstated. The platform was one of the first to normalize app-based bookings in a country that previously relied heavily on informal and unreliable public transport. It also facilitated the use of digital payment systems, paving the way for fintech growth. Importantly, it created opportunities for women—not just as riders but also as drivers—breaking barriers and encouraging female participation in Pakistan’s workforce.

However, the ride-hailing industry, despite its innovation, operates on razor-thin margins. The expectation of subsidies and discounts from users, coupled with operational costs like fuel, vehicle maintenance, and driver incentives, makes profitability difficult to achieve. In economies like Pakistan, where price sensitivity is high, sustaining such a business model without heavy investment becomes a major challenge.

Careem’s withdrawal will impact thousands of drivers and users who relied on the platform for daily transport and income. It raises questions about how Pakistan will support its digital infrastructure moving forward and what this means for foreign investors considering entering or expanding in the market. The absence of such a prominent player could slow the momentum of digital adoption and innovation unless local or regional startups step up to fill the void.

That said, the exit may create room for more adaptable, localized startups that understand the nuances of the Pakistani market better. However, these businesses will still face the same systemic issues—economic instability, weak regulatory frameworks, and limited access to capital—that ultimately drove Careem’s decision.

As Pakistan works to rebuild its economy and attract tech investment, the Careem chapter offers both a cautionary tale and a valuable lesson in sustainability, adaptability, and the risks of overreliance on foreign capital in a fragile economic ecosystem. The digital transformation Careem helped ignite may continue in new forms, but the road ahead will likely demand more resilient business models and better local support structures.