Uber Effect Makes Prices Fall, but Drivers Are Forced to Work Nearly 24 Hours in São Paulo

07/25/2016 - 10h19

One year ago, São Paulo residents had basically two options when they wanted to get a car in the streets: taxi or Uber?

Now, in addition to the arrival of newcomers in the market, the services have multiplied. With a few clicks on their smartphones, passengers can get from motorcycle taxis to armored vehicles. And all the dispute among companies has created an effect that eventually reached those at the end of the line: the clients.

A ride from Largo Santa Cecília to Paulista avenue, in the city's central region, costs some R$ 15 by taxi. If the passenger decides to use UberPool, in which strangers share the same vehicle, it costs R$ 7.68 – little more than twice the price of a subway ticket.

To counter the competition created by the newcomers, apps connected to the traditional taxis have offered discounts of up to 30%. Uber carries out a strong campaign to attract new drivers, with a bonus of R$ 700 for those who indicate another driver.

In spite of the companies' speech, taxi and Uber drivers now complain of the fall in the number of rides. They blame both the economic crisis and the increase in competition.

"Taxi drivers now have 45% less rides in comparison with 2015," says Antonio Matias, the president of Simtetáxis, one of the taxi drivers' union in São Paulo. "There are drivers who work all night and make only R$ 30."

The same complaint is made by Uber drivers. At the end of last year, they used to make up to R$ 2,000 per week. Now, they are happy if they can earn R$ 1,200.

With more supply than demand, working hours become longer. On July 8, Uber driver Carlos (not his real name, as he requested) began to work at 5 a.m. with a ride to Guarulhos and intended to drive until 4:00 a.m. of the next day, a Saturday. "I took a few naps in the car," says Carlos.

In addition to water and candy, Uber drivers began to offer business cards with their contacts to try to avoid the virtual queue.

To try to get their share of the market, foreign apps that operate in the city of São Paulo also offer different services.

Cabify, of Spain, has a strict selection of its drivers - they undergo a psychological exam - and offers fixed prices for the rides, without any increase if there is heavy traffic or high demand, which are factors that influence the prices of Uber rides.

India's WillGo offers several different types of vehicles, such as SUVs and armored models, and also delivers objects and documents. Both companies began operations in São Paulo city last month.

Other services in the same market niche are Bluclub, which offers armored cars and MeLeva, in which each driver sets his own price.

REGULATION

The arrival of new companies is a consequence of the regularization of this type of service, which occurred in May by the Fernando Haddad (PT) administration through a resolution after bill proceedings stopped in the Lower House.

The rule authorizes 900,000 kilometers in rides around the city per month, with a fee of R$ 0.10 per kilometer. There is no limit for the number of cars offering the service.

Translated by THOMAS MUELLO

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