Contxto – Chinese ride-hailing whopper, DiDi, recently launched in Costa Rica, confirming that Uber and other similar apps will now really have a run for their money in Latin America.
Founded in 2012, DiDi has experienced quite an epic trajectory. The company has already seen an investment from Apple of US$1 billion and is well-past acquiring Uber China.
Regionally, it has also set up shop in Mexico, Brazil, and Colombia, among others, despite (or perhaps thanks to) a lack of regulations for ride-hailing apps in many of these countries.
Uber began operations in Costa Rica all the way back in 2015. However, it has been continuously under fire due to the motley collection of legal guidelines concocted to regulate the ride-hailing app industry. Nothing new at the regional level, I’m afraid.
Adding fuel to the fire, angry cab drivers accuse the U.S. company of undercutting prices and not paying enough tax.
Now, Costa Rican President, Carlos Alvarado, says he believes that the regulation of this industry should be “prompt,” and crafted so that it “creates balance in the market [and] improves conditions for the benefit of families.” Yet, the facts reveal a darker truth.
Back in September, Costa Rican authorities did propose a bill to regulate ride-hailing platforms such as Uber and DiDi. Yet its proposals seemed more like horse-trading to balance the interests of the taxi drivers and ride-hailing apps.
On one hand, the companies will avoid straight-up taxation. The law would instead force them to pay an annual registration fee. On the flipside, taxi drivers will receive fewer inspections, in addition to fewer pricing restrictions when setting fares.
Who’s your DiDi?
Ever since the SoftBank-backed company, valued at over US$20 billion, launched in Mexico last year, DiDi has managed to obtain as much as 30 percent of the country’s market share. Today, it reportedly operates in 32 cities, making Mexico its second-largest market outside of China.
For DiDi, Mexico represents a “testing ground” for expansion into new international markets. According to a statement, the company sees “tremendous opportunity for growth” in the region. In other words, almost eight years since Uber arrived in the world’s largest Spanish-speaking country, Mexico is apparently ripe for disruption—again.
“Currently, less than three in 10 Mexicans use ride-hailing,” claimed DiDi—presumably while rubbing its hands. “Barely one in 10 are using food delivery. We’re really excited about where we are at after just 18 months here.”
Consider also that DiDi acquired 99, the Brazilian ride-hailing app, last year. It did so while gaining a stronger foothold in the rest of South America. The company still operates under the “99” label, but has also debuted a food delivery service to compete with Uber Eats, 99 Food.
Uber’s regional market share hits a roadblock
All things considered, it appears as though DiDi is outperforming Uber and other competing applications in the region. At least in Mexico, from a 2017 study conducted by Dalia Research, the U.S. scaleup used to obtain 87 percent of the ridesharing market. No more.
Proving this even further, Latin America was reportedly Uber’s worst-performing region in the first three quarters of 2019. In fact, it merely represented 2 percent of growth for Uber in its latest financial quarter.
-JA
