The competition in the ride-hailing industry has been one of the highlights of this decade. The competition, which started with Uber and Lyft, has now picked up due to the emerging ride-hailing software.
However, it’s also true that with time, the number of competitors has decreased, leaving only a few prominent names. And all of them are now looking for a geographic expansion, which will also serve as the benchmark as to who will become the global leader in the ride-hailing market.
According to Market Watch, the ride-hailing industry will boom to a mammoth $285 billion by 2030. This can be further escalated as China’s Didi Chuxing is giving great competition to Uber. It has surpassed Uber as the world’s most valuable startup. Didi is showing no signs of slowing down.
After establishing its ride-hailing services in China, Didi is now eyeing another region of the world that still has a potential ride-hailing market and vast opportunities that are yet to be explored by any taxi giant. Latin America is a region that fits perfectly with Didi’s vision. Yes, Latin America is emerging as a land of endless taxi opportunities. Let’s see how?
Latin America: The land of endless ride-hailing opportunities
America is considered one of the world’s most urbanized regions. Latin America is home to over 649 million people, out of whom 83% live in urban areas.
Moreover, in the next decade, it’s estimated that the total urban population will increase to 711 million. With such a massive population, urban planning becomes a huge challenge. The growth of the population also means growth in traffic infrastructure, the expansion of roads, the expansion of public transport, the expansion of parking in real estate, and many more.
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It’s often debated that almost 30% of the traffic in big urban cities is due to the frustrated drivers who wander all over searching for an elusive parking space. Let’s take the example of Mexico City, which is one of the most congested cities in the world. In Mexico City, a journey takes on average 66% longer, and the traffic adds an extra 227 hours to the total travel time of a typical commuter.
Urbanization is often linked with digitization. That’s why online services like app-based ride-hailing, bike-sharing, and car-sharing are bound to become popular in these regions. Latin America still relies on the traditional form of public transportation, like trains, buses, and subway systems.
However, bigger cities like Mexico City, São Paulo, and Bogota can no longer support any more vehicles without overhauling the existing infrastructure. Even large metro areas are already running above their maximum capacity during the peak hour, which makes owning a car for commutation a hassle rather than a luxury.
This is the reason why many users are refraining from buying a car and are looking for some better alternative modes of transportation, preferably on-demand services.
Market Trend in Latin America
Millennials constitute one-fourth of the total Latin American population. This section is speedily embracing access to alternative modes of transportation and on-demand services through ride-hailing solutions instead of owning a car.
Apart from the increasing demand for alternative transportation, we must also look at the fact that Latin America is the world’s second-fastest-growing mobile market. We already discussed above that it is the home to 649 million people, and according to the estimation, around 73% of the total population will have access to a smartphone.
The eagerness and readiness of Latin Americans to adopt alternative on-demand ride-hailing solutions due to the absence of accessible and efficient public transport systems presents Latin America as a golden opportunity for all taxi companies to set up their future business in the region.
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Ridesharing market in the region
Latin America is a promising land for ride-hailing companies due to its endless opportunities. According to Statista, the ride-sharing revenue of this region is expected to cross $1 billion by the year 2023, which would be almost four times that of $518 million recorded in 2018.
Moreover, the revenue is expected to grow at an annual growth rate of 16.6%, resulting in the overall market volume of $16,459 million by the year 2023.
One major factor that has triggered the demand for ride-sharing is safety. Latin America doesn’t have a good track record when it comes to transport safety. That’s why people are migrating towards using ride-hailing solutions, as they provide features like GPS tracking and price transparency. Moreover, these services also provide women-only ride-sharing in cities like São Paulo, Brazil.
Key players in the region
Didi Chuxing
Didi Chuxing was founded in 2012 in Beijing, China. The company is known for its ride-hailing application that matches the customer’s request with that of nearby local drivers. The company also provides taxis and vehicles for hire, along with offering chauffeur services, ride-sharing services, and minibuses.
Didi was able to defeat Uber in China to claim its dominance over Asia. And now it’s planning for international expansion. Didi's acquisition of 99 shows that Didi acknowledges the potential that lies in the region. Currently, Didi operates in Mexico and Brazil and is planning to expand into Colombia and Chile. Recently, it also began its operations in Panama.
Uber
Uber entered Latin America in the year 2013. It claimed to have more than 36 million active users. Mexico is a huge success for Uber as it became its second-largest market after the U.S. Uber almost had a monopoly on ride-sharing in Mexico, with only a few competitors. Uber has its operations in more than 16 countries in the Latin American region.
However, the recent years haven’t been that kind of Uber. The emergence of China’s Didi in the Latin American region is making things worse for Uber. Uber’s first exit in the Latin American region came in Colombia when it failed to win the government’s reprieve from a ruling that it had competed unfairly.
This happened after the judge at the industry’s market regulator found that Uber’s application had violated the competition norms. Earlier, Uber had faced backlash from the taxi drivers since the day it chose Bogota as its entry point to the Latin American region back in 2013.
Easy Taxi
Easy Taxi started its operation in Latin America in 2011. Rocket Internet backs this ride-hailing solution. Currently, Maxi Mobility owns this company, which it acquired from Rocket Internet in the year 2017. Maxi Mobility also owns Cabify, which operates in many countries of Latin America like Peru, Panama, Bolivia, Argentina, Brazil, Chile, and many more.
In 2015, Easy Taxi merged with Tappsi, which is a Colombian on-demand ride-hailing software. This step was taken to solidify Easy Taxi’s position in the region. Easy Taxi has impressive traction as they have raised more than $75 million to date. However, as the ride-hailing competition stiffens, the company is likely to be an acquisition target for giants like Didi, Uber, or Softbank.
Cabify
Cabify is a Spanish company founded in Madrid. However, the company has heavily invested in positioning itself as a Latin American company. Cabify was able to gain a strong start due to the funding raised by Maxi Mobility, its parent company.
Cabify has reported that it has more than 13 million users. They also said that their user base increased by three times from the year 2016 to 2017, and they completed six times more trips in the year 2017.
Cabify is a strong competitor for 99, Uber, and Easy Taxi in Brazil. Reportedly, it has around 40% market share in the city of São Paulo, which is Latin America’s biggest city.
Conclusion
In this article, we studied and discussed the ride-hailing and taxi market for the Latin American region. We found out that this region has a lot of potential as far as taxi businesses are concerned.
The market trends and the ride-hailing market in the region present vital data that shows how big and lucrative the opportunity is for taxi companies. Along with that, we also discussed the current big players who are competing aggressively in the region to emerge as a leader.
If you’re also a taxi entrepreneur, then you must consider this region without any doubt. If you liked this article and want to read more such insightful write-ups regarding taxi services, ride-hailing, and entrepreneurship, then keep reading this space.
