Latin America’s COVID-19 pandemic is forcing Uber Technologies Inc to adopt the taxi model it was meant to drive off the streets of cities from Santiago to Medellin, Colombia.
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 start-up’s Chinese rival, Didi Chuxing (滴滴出行), which has made big inroads in Latin America in the past few years, has had a head start in working with taxi drivers in the region. It has been implementing health measures, such as plastic barriers, to keep passengers hailing its cabs safe.
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 center, 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 reporters.
“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.
Two taxi drivers in Colombia told reporters that they had been approached about signing on to Uber.
An Uber spokeswoman 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.
Latin America once appeared a safe haven for Uber in the face of stiff competition in the US and regulatory battles in Europe.
However, 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 licenses and criminal background checks, can still operate freely.
Uber’s move to taxis might indicate that it “has realized it needs to take a localized, market-by-market approach as opposed to just applying the same model everywhere,” said James Cordwell, a London-based analyst with Atlantic Equities LLP.
The stakes are high for Uber and Didi, which have begun to hit a ceiling in their home markets, Cordwell said.
Uber wants to show investors that 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,” Cordwell said.
Didi, which has long partnered with taxis in China and began offering cab services soon after entering Chile and Colombia, said it has 50 percent of taxi drivers on its platform in the Chilean capital, Santiago, and about two-thirds of drivers on board in the Colombian cities of Bogota and Medellin.
It has begun recruiting taxi and ride-hailing drivers as it prepares to launch in La Plata, Argentina, its first foray into the country, a spokesman 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.”
As start-ups 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 percent 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.
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.
Additional reporting by Nelson Bocanegra and Tina Bellon
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