Categories
Transportation

Uber vs. Colombia: in defense of the ridesharing market

The year started badly for Uber in Colombia. In a press release, the company announced in the first hour of February 1; it would stop operating in the country in compliance with the ruling of the Superintendence of Industry and Commerce (SIC) of December 20, 2019.

Uber’s exit from Colombia is a unique case in Latin America. Although the company maintains legal conflicts in other Latin American countries such as Argentina and Chile, this time is the first time that a transport service is expelled from a country in the region.

Colombia is the first country on the continent to close the doors to technology.

Uber in a press release

The ridesharing battles

Since its inception, app transport services have had to deal with regulators around the world, with mixed results for companies. Some of the conflicts that Uber has had are the following:

  • After mass protests by Bulgarian taxi operators, Uber had to leave the country, where he had about 40 thousand users. The country’s tax and transport authorities imposed a fine of 50 thousand euros, while new legislation required that transport companies have qualified drivers with formal contracts.
  • In May 2016, Uber and Lyft had to leave Austin, Texas, when city voters rejected the ridesharing services from self-regulating, instead of requiring fingerprint-based reviews. This situation allowed a local application called RideAustin to emerge in the city, but Uber and Lyft returned a year later. Republican Governor Gregg Abbott signed a law that gave the state the regulation of transportation services, formerly the domain of local governments.
  • In July 2016, the Hungarian nationalist government passed a law that allowed blocking Internet application services, which affected Uber after numerous protests against him by taxi drivers.
  • In March 2017, Uber had to leave Denmark. The country’s new regulations required the company to include seat sensor taximeters in vehicles. Also, the company was accused of helping its drivers to bypass national laws.
  • Since May 2017, Italy is the only country in which Uber operates without a low-cost option because the Italian court determined that only licensed drivers could work in the country. For this reason, only the Uber Black service is available.

As a company, Uber is used to reverence. However, the case of Colombia is the first in Latin America. With two million users and 88,000 driving partners in the country, Uber will want to recover the fourth largest market in the region at any cost.

A history of conflicts in Colombia

The exit of Uber from Colombia is the outcome of almost five years of conflicts in the country. Since September 2015, the taxi drivers’ union went out to protest the lack of regulation in the service, even reaching physical violence against drivers and users of the application.

Uber announced its departure of Colombia

However, just last year, things ended badly in court for Uber. In August 2019, the company was fined more than $ 600,000 for obstructing a regulatory visit in 2017. This caused Uber to give up investing $ 40 million in a support and service center in Colombia, given regulatory uncertainty.

At that time, the general manager of Uber Colombia Nicolás Pardo mentioned that.

“After six years of seeking avenues for dialogue and in the absence of a road map to advance regulatory stability and legal certainty, we regret having to relocate the destination of this investment.”

Finally, in December 2019, the SIC ordered the company to stop operating because of unfair competition.

Uber calculates losses of $ 250 million due to the cessation of operations in the country. At the moment, Uber plans to take the case to international courts. On the one hand, his departure can be considered a violation of the Free Trade Agreement with the United States. The company also called the decision of the Colombian authorities an act of censorship that violates the American Convention on Human Rights. George Gordon, an Uber executive, said they are considering this and other legal outlets.

Uber’s biggest concern is that, while they leave the market, competitors such as Didi or Cabify stay in the country, who can take advantage of their main competitor’s exit to increase their market share.

At Davos, the president of Colombia, Ivan Duque, said that technology companies are welcome in Colombia, as long as they play under the same rules as the other competitors.

For some members of opposition parties, the decision of the Superintendency seeks to win over the taxi drivers’ union, following protests against the Duke presidency last year. The Superintendency is elected directly by the president.

Uber expansion in Latin America starts with the left foot.

In August 2019 alone, Uber CEO Dara Khosrowshahi announced on CNBC News his intentions to expand in Latin America, after a disastrous Q2 where losses of 5 billion were recorded.

For Khosrowshahi, the region is promising thanks to the growth of its Gross Domestic Product, which goes hand in hand with the growth of its cities.

In the face of Khosrowshahi’s optimism, a harsher reality is imposed: the market for ridesharing apps is very fragmented in Latin America. Expanding in Latin America will not be so easy if Uber insists on breaking the rules, as he has done in other parallels and meridians.

Categories
Transportation

The challenges of rideshare apps in Latin America by 2020

In the 2019 Q2 report, Uber announced that the company had lost more than $ 5 billion. According to Business Insider, the most significant expenses the company had were in the area of ​​research and development. At the same time, other billions went to marketing, operations, and compensation expenses to drivers. Despite the red numbers, Uber continued with its investments in Latin America.

In August 2019, Uber CEO Dara Khosrowshahi explained in an interview with CNBC News the company’s plans in Latin America. In summary, Latin America is one of the largest markets for ridesharing. The increase in Gross Domestic Product (GDP) attracts companies, while the growth of Latin American cities makes the region one of the best places for rideshare apps.

Khosrowshahi stressed that Buenos Aires is now the fifth-largest city for rideshare applications. The name of Uber is known and loved in Latin America. Uber plans to bring one service and then add more services to the company.

We observed these types of movements in August 2019, when Uber announced the start of operations of the Jump anchorless bicycles. The same is intended by the company with Uber Eats, which is already part of the daily vocabulary of Americans. The challenge is to do the same in Latin America, in a sector where Uber must compete with the Colombian unicorn Rappi.

To achieve this, Uber must spend money on investment and execute its project. However, the company relies on the prestige of its brand and the platform it has built locally.

“There is no reason why we cannot be as successful in Latin America as we are in the United States.”

Dara Khosrowshahi, CEO of Uber

Uber’s competitors in LatAm

Dara Khosrowshahi is not the only executive who shows his optimism towards Latin America. Other companies have also opted for the Latin American market this 2019. In March this year, Waze announced its Waze Carpool rideshare service in Mexico.

Waze Carpool is an indirect competitor of Uber, although the business model is a bit different. Unlike other transportation services, shared trips in Waze Carpool are made by drivers who are Waze users, no salary is paid, and no income is involved; Also, there is a limitation of two trips that the driver can offer per day. Waze’s bet is to fill the empty seats of the 30 million cars in the streets and avenues of Mexico circulating daily, to remove the vehicles that are on the road.

For its part, the Chinese rideshare company Didi Chuxing entered the Latin market through Mexico in March 2018. Subsequently, it began its expansion in Latin America at the end of that year, after acquiring 99, the leading rideshare platform in Brazil. Didi spent $ 900 million on the operation, about $ 600 to buy the shares of other investors and $ 300 million more for the expansion of 99, which, with these movements, reached unicorn status.

In February 2019, Reuters announced that Didi was hiring personnel in Chile, Peru, and Colombia, while other reports indicated that the number of hiring of the company reached one thousand, giving clear signs of its expansion intensities.

In mid-2019, Didi Chuxing made its first significant expansion in the region after announcing that it would double its presence in Chile and Colombia. Didi is the leading rideshare company in China, and Latin America is currently a key market in its expansion ambitions.

Mi Yang, who leads Didi’s operations in Central and South America, mentioned that Chile and Colombia are “two important centers of growth and innovation in the region.”

In this year, in old acquaintance returned to the Mexican market of rideshare: Beat. In past years, the Greek app tried without much success to enter the country. Now with a more developed market and with the support of Mercedes Benz, Beat became in three months, the third most used transport application in the country, only behind Uber and Didi. In November, Beat announced its expansion to more cities in Mexico.

Currently, Beat is the most popular transport application in Greece and Peru, as well as being the second most used application in Colombia and Chile.

“Our goal is to become the strongest mobility application in Latin America in the coming years,” by offering an incredible transportation experience at very competitive prices. “

Nikos Drandakis, CEO of Beat

Regarding the case of Mexico, Carlos Lieja, General Director at Beat México commented that “In less than a year, Beat has established itself as a key player in Mexico, because after the successful launches in Mexico City, Guadalajara, and Monterrey, it is now ready to move more Mexicans in these new markets.”

The rapid expansion of digital services has allowed Latin America to be an increasingly attractive market, and some competitors regret not realizing it before. This is the case of Cabify CEO Juan de Antonio, who considered it a mistake not to have started its expansion in the Latin American market.

In 2017 and 2018, Latin America represented 83% and 65% of Cabify’s revenues. The first countries where the Spanish company operated were Peru, Mexico, and Chile. Lima was the first market in Latin America of Cabify, when they officially entered on October 17, 2012. Cabify was the first application in the market at the local level, and since then, it has built a brand that is associated with security, transparency, quality in the service.

Recently, Cabify has partnered with Easy Taxi, which has allowed it to extend its services to a sector of the population with fewer resources, which does not usually have a credit card.

The rideshare market is fragmented in Latin America

A large number of competitors in the rideshare market indicate that Latin America is currently a relatively developed market and promises to grow as more and more people in the region are included in the digital world.

However, the number of competitors is also an indicator of how the market has been fragmented in recent years, so these types of applications are becoming less attractive to investors.

Since its release, Uber has lost a third of its value. The company started with a cost of $ 45 per share in May, while in November, the company’s purchase value was below $ 30.

Suspicions about the company’s lousy business also came after the announcement that Uber co-founder Travis Kalanick sold most of his shares in the company in early December 2019 and will leave the board of directors at the end of the year. But, if the market is flourishing, why are there so many concerns about the future of companies like Uber?

Autonomous cars are a matter of medium-term concern not only for rideshare companies but for car manufacturers in general. Uber has spent large amounts of money in the research and development of this technology. However, other companies are also doing the same. And these have an advantage over Uber: they are car manufacturers. Companies like Ford or Toyota would have the benefit of already having a production line that allows mass production of these cars.

Not all analysts agree with the most fatalistic scenarios of companies like Uber. For Stifel analyst, Scott Devitt, low Uber stock prices are a great “buy.”

For Devitt, the fight between competitors in the rideshare market has been less and less aggressive. In contrast, Uber has proven to have a route to become profitable in an accelerated manner, in addition to setting clear goals for 2021.

The challenges of rideshare companies in Latin America

The Latin American market has shown to be mature for rideshare applications. Now Didi Chuxing, Uber, Beat, Cabify, and other competitors must prove to be ready for the Latin American market, which can be quite complicated.

One of the main concerns of users and drivers is the security that these platforms can guarantee. In early December 2019, Uber published a report in which he pointed out that in the United States, more than six thousand platform users and drivers said they were victims of sexual assault. In Mexico, a platform driver was recently arrested, accused of rape.

The platform has implemented security measures to reduce these incidents, such as the option to record audio or verify the identity of those who pay in cash.

Security problems affect not only users, but also drivers who create WhatsApp groups to warn of dangerous routes or areas to avoid.

In the first half of December 2019, a group of protesters demanded Didi support to locate the driver José Fuentes, who disappeared after finishing his last trip. After several days of searching, the driver’s body was found in a state of decomposition and with firearm impacts.

Didi currently uses facial recognition to verify the identity of drivers, but it is clear that these measures are not yet sufficient for the region. It will be missing the rideshare companies innovate in these aspects.

Categories
Transportation

Beat expands services in Latin America

The mobility application Beat announced expansion plans in Latin America with the start of operations in 9 new cities in Mexico and Colombia. 

In Mexico, the service was launched for passengers in Durango, Villahermosa, Querétaro, Saltillo, León, Aguascalientes and La Laguna, and in Colombia in Bucaramanga and Barranquilla.

Rapid growth in a competitive industry

Beat has managed to open space within the competitive mobility industry. The simultaneous launch in Mexico and Colombia reflects the company’s ambitious expansion strategy within Latin America in a sector where even companies with Silicon Valley capital such as Uber and Lyft have had problems consolidating.

https://www.youtube.com/watch?v=1QA8E6Aujvg

Founded by Nikos Drandakis, Beat is currently the # 1 player in his home country, Greece and Peru, the second in Colombia and Chile, and quickly became number 3 in Mexico, just three months after being launched in the country.

Beat has more than 438,000 registered drivers worldwide and 13 million passengers who enjoy the service every day.

“As we expand to new cities, we seek to offer an affordable and convenient transportation service for many more passengers and drivers. By doing this, we contribute to urban development in more and more cities, while offering an effective alternative to having an extra income, “said Nikos Drandakis, CEO of Beat.” Our goal is to become the most robust mobility application in Latin America in the next years, by offering an incredible transportation experience, at very competitive prices. “

Beating in Mexico

Regarding the case of Mexico, Carlos Lieja, General Director at Beat México commented that “In less than a year, Beat has established itself as a key player in Mexico, because after the successful launchings in Mexico City, Guadalajara, and Monterrey, it is now ready to move more Mexicans in these new markets. “

This expansion places the presence of Beat in 20 cities in Latin America. With the offer of the best incentives for drivers, the lowest rates for passengers, and being an application with a very friendly use and excellent customer service, Beat anticipates that thousands of drivers and passengers will register in the app during These new releases.

Beat app is available for download and use in Google Play and App Store.

Categories
Transportation

Do you know Uber’s e-bikes in Mexico City?

Since August, the Jump Bike rental service is available in Mexico City. Users can rent these electric bicycles from the Uber app by selecting “Bicycle” in the platform. This option is an alternative to move faster between city traffic.

Users can unlock the bicycle lock with a code that will be offered from the application and park them later in the service area.

Mexico is the first city in Latin America where Uber presents this service that is already available in various parts of the United States and Europe.

Jump service areas

Uber bicycles are available in polygons in the city such as Polanco, Juárez, Roma-Condesa, Cuauhtémoc. The cost of the service is 10 pesos per unlock and 3 pesos per minute of bicycle use.

In addition to bicycles, Jump also offers scooter service. However, the current regulations of Mexico City prevent them from providing this service.

There will be almost 5K bicycles in the city

On August 2, 2019, the Secretary of Mobility of Mexico City (SEMOVI) began the process to offer annual permits for operation of bicycles without anchorage.

A total of 4,800 bicycles without anchorage will be available in the city, with the presence of Motum, Jump, and Dezba.
The promotion of this sustainable transport is part of the Strategic Mobility Plan 2019.

Semovi has worked collaboratively with the anchorless bicycle companies to carry out this regulation, which can provide them with certainty to make their investments in the capital.

Categories
Transportation

An app to compare urban trips arrives in Mexico

The urban mobility market is reaching the saturation point in Mexico as in other countries of the world. Every day there are more apps and options to go from one side to another: new public transport routes, Uber or Cabify type apps, even bicycles, and skates. An app that allows users to choose the service that suits them best arises in this context. Its name is VAH.

Marcio Bern is one of VAH co-founders. He had the idea while a family member was in the hospital. Bern had to travel every day to visit him. Soon he realized that it was cheaper to move using other alternatives than going by car and spend on gasoline or parking. However, Bern noticed a problem, such as the lack of price consistency between the different apps.

Five VAH categories to choose

VAH centralizes all travel options in one place so that the passenger can choose the one that best fits in time and money to their needs.

VAH screen capture

The application arose in Brazil in mid-2016. Now it comes to Mexico with five categories:

  • VAH Urbano: to compare taxis, carpooling services, skates, and bicycles.
  • VAH Áreo: to compare air tickets.
  • VAH Bus: to compare buses.
  • VAH Rent: to rent vehicles.
  • VAH Aventón: to share trips in private cars such as Bla Bla Car.

VAH goal is to allow users to choose the closest, cheapest or fastest trip in any of the categories. The user chooses the way to make the trip then the app redirects it to the service of their preference. The app is free for users. It makes money by charging a commission to services or selling anonymous consumption data.

Improving mobility

VAH teamwork operates from Sao Paulo. They work with different web services, as well as the APIs of transport companies such as Uber, Cabify, Taxify, etc. Currently, the app has almost one million downloads and about 250,000 active users globally.

In the opinion of VAH teamwork, Mexico City is one of the places where the app could work best. Like Sao Paulo, Mexico City is a populated center where there are traffic problems. Driving a private car can be a tortuous journey. Users have the opportunity to travel more comfortable with VAH.