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Uber pulls Latin American U-turn by joining taxi ranks

Uber pulls Latin American U-turn by joining taxi ranks

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5 -min read
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[MEXICO CITY] Latin America's coronavirus crisis is forcing Uber to adopt the taxi model it was meant to drive off the streets of cities from Santiago to Medellin.

Uber's U-turn has been prompted by a pandemic-linked regulatory clampdown in countries including Chile and Colombia, where the ride-hailing it has built its name on is unregulated.

The San Francisco startup's Chinese rival Didi, which has made big inroads in Latin America in recent years, has a head start in working with taxi drivers in the region. It has been implementing health measures like plastic barriers to keep passengers hailing its cabs.

Uber has responded by racing to join Latin America's taxi ranks, announcing a service in Chile in June after lockdowns sidelined its ride-hailing drivers there, as well as plans to launch taxis in Brazil's financial centre Sao Paulo.

The company already has a track record for such moves. It has offered a taxi service in cities like Madrid, Tokyo and Athens, where local regulation has made it hard to operate.

Now it is also considering launching cabs in some parts of Mexico where local laws do not permit ride-hailing, a person with knowledge of the matter told Reuters.

"We are exploring different options to continue leading the inclusion in urban mobility in Mexico and the rest of Latin America," a spokesperson for Uber in Mexico said.

Two taxi drivers in Colombia told Reuters that they had been approached about signing on to Uber.

An Uber spokesperson in Colombia said it had no immediate plans to offer a cab service.

A spokesperson in Chile said Uber had launched a taxi service in Santiago and the port of Valparaiso in June, after a pilot began in 2018 in the southern city of Coyhaique.

MEAN STREETS

Latin America once appeared a safe haven for Uber in the face of stiff competition in the US and regulatory battles in Europe.

But the region has seen massive demonstrations against ride-hailing by cabbies and even attacks on Uber drivers.

Uber operates in a legal gray area in Chile, with passengers sometimes masquerading as family or friends to dodge police. More frequent inspections during the pandemic have made such subterfuge all but impossible.

Meanwhile, taxi drivers, who have special licences and criminal background checks, can still operate freely.

Uber's move to taxis may indicate that it "has realised it needs to take a localised, market by market approach as opposed to just applying the same model everywhere," James Cordwell, a London-based analyst with Atlantic Equities, said.

The stakes are high for both Uber and Didi, which have begun to hit a ceiling in their home markets, Mr Cordwell said.

Uber wants to show investors its business model is still viable in the new normal of a global pandemic, while Didi is the subject of persistent rumors of an initial public offering.

"They are both looking to Latin America as a key part of their growth story," Mr Cordwell said.

Didi, which has long partnered taxis in China and began offering cab services soon after entering Chile and Colombia, said it has 50 per cent of taxi drivers on its platform in the Chilean capital of Santiago and about two-thirds of drivers on board in the Colombian cities of Bogota and Medellin.

It has begun recruiting both taxi and ride-hailing drivers as it prepares to launch in La Plata, Argentina, its first foray into the country, a spokesperson said.

"The total quarantines resulting from the health crisis presented a mobility challenge in our cities in Chile and Colombia," Didi said in a statement.

"DiDi Taxi registered a significant increase not only in demand for the service, but also in the registration of taxi partners in both countries."

For cab drivers, reputations are likely to play a part in deciding who they partner.

"We knew they (Didi) had worked with taxis in other places... Uber has had a poor reception for the war they waged on us at the beginning," said Mr Guillermo, who is working with Didi in Santiago.

The 34-year-old cabbie said there is a perception that Uber has embraced cabs out of necessity during the pandemic but is not committed to partnering long-term.

Didi, which honed its playbook for the coronavirus in China, said it has installed more than 800 plastic barriers in Chilean cabs in an attempt to reduce the risk of coronavirus transmission between passengers and drivers.

It has also distributed masks, antibacterial gel and other supplies to taxi drivers and performed more than 2,000 vehicle cleanings in Santiago, Didi added.

In a statement announcing its plans to launch taxis in Brazil, Uber said all drivers will be required to verify their use of masks and can seek reimbursement for supplies such as face coverings and hand sanitizer.

As startups and taxis build bridges, those feeling the pain most are ride-hailing drivers, who are wrestling with everything from police stops in Santiago to a strict quarantine in Bogota which reduced fares to a trickle.

"Work has dropped close to 40 per cent compared with before the pandemic," said Guillermo Bravo, a cab driver in Bogota who said he had been invited to be part of a new Uber taxi service there.

Mr Bravo does not think ride-hailing apps are the answer during the economic turmoil triggered by the coronavirus.

"People who don't have cars prefer to take the bus to save money," he said. 

REUTERS

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