Lyft takes on Uber’s luxury service
The ride-hailing firm offers service in a black car or SUV to compete with its rival.
SAN FRANCISCO — Five years ago when Uber was known for its luxury black cars, Lyft launched its peer-to-peer ride-hailing service, turning regular vehicles into taxis.
Now, Uber is synonymous with peer-to-peer ridehailing, and Lyft is launching its own luxury black car service, Lyft Lux and Lux SUV.
The service, available Thursday in Los Angeles, San Francisco, San Jose, New York and Chicago, is a step up from the “Premier” offering Lyft debuted last year that allowed passengers to book rides from drivers with vehicles from higher-end makers such as BMW and Audi. Using Lyft Lux, passengers will be able to book a black car or luxury black SUV from the Lyft app.
Pricing will vary by market, but drivers can expect to earn around three to five times the fare of ordinary Lyft rides, and nearly double the fare of Lyft Premier rides, according to Lyft.
To drive for Lyft Lux or Lux SUV, drivers have to have one of several dozen vehicles that qualify for the service, such as a Tesla Model X, a Porsche Cayenne, a Rolls Royce Ghost or a number of models from Lexus, Mercedes-Benz, Cadillac and BMW.
Although it may seem counterintuitive to launch a high-end service at a time when rides are getting cheaper, business experts said it makes sense for Lyft to diversify its offerings.
Having a higher-end service gives Lyft another front on which to compete, according to Evan Rawley, an associate professor at Columbia Business School who studies Uber and Lyft.
In the cutthroat ridehailing business, where both Uber and Lyft have spent millions of dollars in driver and passenger subsidies to undercut each other, if Uber lowers the fares for its UberX service, Lyft can fight back by lowering the fares on its Premier and Lux services, Rawley said.
The other reason for Lyft to diversify its business is simply that it can.
“They’ve already got the network out there, so the more rides they can get for their drivers, the more drivers will be willing to work for them,” Rawley said. “It hasn’t been a huge part of the market by revenue, but it’s a profitable part of the market. It’s a niche product with high margins.”