Uber looks to dom­i­nate Brazil

Uber’s third largest busi­ness af­ter US and In­dia

Kuwait Times - - BUSINESS -

Af­ter ced­ing to the com­pe­ti­tion in China ear­lier this year, ride-hail­ing com­pany Uber is shift­ing fo­cus to Brazil, Latin Amer­ica’s most pop­u­lous nation. In­tro­duced in Brazil just over two years ago, use of the app has in­creased so quickly here that the South Amer­i­can gi­ant now rep­re­sents Uber’s third largest busi­ness world­wide, af­ter the United States and In­dia. The rock­et­ing growth, how­ever, is also a race against time: lo­cal gov­ern­ments are mov­ing to­ward reg­u­lat­ing and tax­ing the com­pany in ways that may hurt its com­pet­i­tive ad­van­tage while taxi unions are push­ing to ban it en­tirely.

“There are many is­sues with Uber now be­cause it’s be­come a big busi­ness in Brazil,” said Fabro Steibel, ex­ec­u­tive di­rec­tor of the In­sti­tute of Science and Tech­nol­ogy, a Rio-based think tank. “It’s too early to know if Uber will be a ma­jor prob­lem or a ma­jor so­lu­tion” to the coun­try’s trans­porta­tion needs. The US-based com­pany is op­er­at­ing in 37 Brazil­ian cities, in­clud­ing Rio de Janeiro, the cap­i­tal of Brasilia and eco­nomic pow­er­house Sao Paulo. The com­pany boasts 8 mil­lion “ac­tive users” and more than 50,000 Uber driv­ers in Brazil. It has ben­e­fited from a con­flu­ence of fac­tors.

Brazil’s econ­omy is mired in its worst re­ces­sion in decades, with many rid­ers look­ing to save money and a ready sup­ply of po­ten­tial driv­ers who are oth­er­wise un­em­ployed or un­der­em­ployed. A strong car cul­ture in Brazil, sim­i­lar to the United States, com­bined with rel­a­tively good roads has al­lowed for growth that would be im­pos­si­ble in other, poorer Latin Amer­i­can coun­tries.

Grow­ing com­pe­ti­tion

In con­trast to the sit­u­a­tion in China, where Uber China had a drag-out fight with ri­val Didi Chux­ing be­fore be­ing ac­quired by Didi in Au­gust, in Brazil Uber has no sig­nif­i­cant com­pe­ti­tion. And while Brazil is known for a byzan­tine gov­ern­ment bu­reau­cracy and high taxes, such reg­u­la­tion has yet to catch up with the shar­ing econ­omy.

Slowly, how­ever, that is chang­ing, which could make it harder for Uber to con­tinue of­fer­ing steeply re­duced rates to cap­ture market share. Taxi unions na­tion­wide are push­ing a bill be­fore Congress that would ban the com­pany. Thou­sands of driv­ers from around the coun­try gath­ered for a protest in Brasilia last month.

In Rio, Mayor Ed­uardo Paes signed leg­is­la­tion last month to pro­hibit the use of pri­vate ve­hi­cles for paid rides, es­sen­tially ban­ning the use of ride-hail­ing apps. Ear­lier this year, how­ever, a Rio judge ruled that pri­vate driv­ers would have the right to con­tinue op­er­at­ing un­til the ac­tiv­ity was reg­u­lated at the fed­eral level. Ap­peals are in process.

In Sao Paulo, where Uber pays a few cents per kilo­me­ter into a mu­nic­i­pal fund, the city gov­ern­ment is set next month to roll out a se­ries of reg­u­la­tions, in­clud­ing sur­prise in­spec­tions of ac­counts of ride-shar­ing com­pa­nies.

Taxi driv­ers ar­gue that Uber driv­ers have an ad­van­tage be­cause they don’t face the same bu­reau­cratic hoops, in­clud­ing sev­eral in­spec­tions each year, a litany of taxes and keep­ing com­pre­hen­sive in­sur­ance. “It’s hard to even have hope,” said Fabio Fre­itas, a 37-year-old taxi driver in Rio who used to make $84 per day but now makes half of that. “Uber is de­stroy­ing our pro­fes­sion.”

Fre­itas says he is look­ing into fac­tory work, as he can go hours with­out pick­ing up a pas­sen­ger. Uber, a pri­vately owned com­pany, de­clined to pro­vide rev­enue num­bers in Brazil. But the com­pany says ac­cu­sa­tions that it’s un­reg­u­lated or un­fairly com­pet­ing are wrong. “Uber pays taxes in ev­ery sin­gle place where it op­er­ates. We are le­gal,” said Uber Brazil gen­eral man­ager Gui Telles told The As­so­ci­ated Press.

Its driv­ers must have a valid driver’s li­cense with a spe­cial an­no­ta­tion al­low­ing them to drive pro­fes­sion­ally. They must also get a back­ground check, reg­is­ter their ve­hi­cle and carry in­sur­ance. All cars must have four doors and air con­di­tion­ing. Telles said that Uber’s rat­ing sys­tem al­lowed the com­pany to weed out any bad driv­ers. He said the com­pany was work­ing to ease traf­fic jams in big cities by of­fer­ing a pool ser­vice, and said the plat­form was help­ing thou­sands of driv­ers sup­port their fam­i­lies.

Mak­ing a liv­ing

How much of a liv­ing driv­ing for Uber can pro­vide, how­ever, is de­bat­able. The com­pany takes 20 to 25 per­cent off the top of each ride, al­ready sharply dis­counted fares com­pared to taxis. Mar­cos Vini­cius, a 30-year-old Rio res­i­dent who lost his job at an off­shore oil com­pany, be­gan driv­ing for Uber a few months ago. He spends $235 a week to rent a 2015 Nis­san sedan, plus an­other $100 for in­sur­ance and gas. In a good week, he’ll pull in a lit­tle over $400 from rides, mean­ing his net is about $100.

Even if he owned his own car, as many Uber driv­ers do, he fig­ures the main­te­nance costs would be high from so many hours on the road. De­spite the draw­backs, he says it’s worth it. “For me, it was ei­ther this or die of hunger,” said Vini­cius. For rid­ers, the big­gest draw is clearly cheaper prices. Many cus­tomers are even find­ing ways to take Uber from places that only taxis can legally go, like bus sta­tions and air­ports.

On a re­cent day, Laura de Oliveira Cortines and her boyfriend ex­ited Rio’s San­tos Du­mont air­port and walked one block to a neigh­bor­ing strip mall. There they waited for a driver to pick them up at a stand with Uber signs and young women wear­ing shirts that said, “How can I help you?” in var­i­ous lan­guages. Tak­ing a taxi would cost about $16. The Uber ride will cost about $6. “We only take taxis when we can’t get an Uber,” said Cortines, a 25-year-old vet­eri­nar­ian. —

AP

RIO DE JANEIRO: In this Nov 11, 2016 photo, Mirella Sanches, a 41-year-old ar­chi­tect, waits to be picked up at an Uber stand. —

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