Uber has been forced to adopt the taxi model in Latin America because of the novel coronaviruss pandemic.
This new approach to business for Uber is because of the pandemic related regulatory clampdown in countries such as Chile and Colombia where the ride-hailing business is considered mostly to be unregulated.
Chinese rid hailing company Didi., Uber’s rival in the region has been working with taxi drivers in the region and has had a head start after making inroads in the region in recent years. Health measures like plastic barriers to keep passengers hailing its cabs are being implemented by it.
On the other hand, Uber’s response to the situation has been to join Latin America’s taxi ranks as it announced services in Chile in June after its ride-hailing drivers were sidelined because of the lockdown there. It also has plans to launch taxis in Brazil’s financial center Sao Paulo.
Such moves are however not new for the company. In cities such as Madrid, Tokyo and Athens, the company has offered taxi services because of operational issues due to local regulations.
And now in Mexico, where local laws do not permit ride-hailing, the company is planning to launch taxi services in some part, said reports.
“We are exploring different options to continue leading the inclusion in urban mobility in Mexico and the rest of Latin America,” a spokesman for Uber in Mexico said.
While reports in Colombia stated taxi drivers were being contacted by Uber, a company there denied the claims in the reports of it offering a cab service. .
In Chile, following a pilot began in 2018 in the southern city of Coyhaique, Uber launched a taxi service in Santiago and the port of Valparaiso in June, confirmed a spokesperson in Chile.
Faced with stiff competition in the United States and regulatory battles in Europe, Latin America was once an apparent safe haven for Uber.
However there have been massive demonstrations against ride-hailing by cab drivers in the region with incidents of Uber drivers and cars being attacked.
In Chile, passengers sometimes masquerade as family or friends to dodge police, as Uber operates there in a legal gray area. Such masquerading have been made almost impossible during the pandemic however because of more frequent inspections.
On the other hand, those with criminal background checks and taxi licenses are allowed to operate freely.
James Cordwell, a London-based analyst with Atlantic Equities, said that Uber’s tactical move to taxis may indicate that it “has realized it needs to take a localized, market by market approach as opposed to just applying the same model everywhere”.
Cordwell said that since both Uber and Didi have started to hit a ceiling in their home markets, therefore the stakes are high for both the companies.
In the new normal of a global pandemic, Uber wants to show its investors that its business model is still viable. Didi on the other hand is at the centre of a possible initial public offering by it.
“They are both looking to Latin America as a key part of their growth story,” Cordwell said.
(Adapted from DeccanHerald.com)