Uber Stumbles, German Rivals Prosper January 5, 2016

As Uber Stumbles, German Rivals Prosperber
By MARK SCOTT JANUARY 4, 2016 6:30 AM January 4, 2016 6:30 am 3 Comments

FRANKFURT — Nic Mewes knew Uber, the ride-booking company, would face trouble ever since it first expanded to Germany in early 2014.

Mr. Mewes, the founder of a rival on-demand taxi smartphone application, MyTaxi, had considered running a service like Uberpop when he started his own company in 2009. Uberpop, Uber’s low-cost service, relies on unlicensed drivers and is similar to UberX in the United States.

But after talking to local authorities and taxi groups, Mr. Mewes, a 37-year-old German, soon realized that Germany’s tough transport rules — involving health exams, security checks and state-issued licenses for all taxi operators — would never allow such a low-cost service to operate freely in the country, Europe’s largest economy.

“In every country, you have to be prepared to change your setup,” said Mr. Mewes, whose start-up now operates across several European countries after being acquired by Daimler, the German automaker, in 2014. MyTaxi currently has 45,000 drivers using its online platform, with roughly half of them based in Germany. “That’s why Uber failed here. They aren’t willing to change when they enter a new country.”

Uber’s struggles in Germany represent one of the few instances in which the company has failed to succeed in its aggressive global expansion plans, which now include operations in more than 350 cities across five continents.

Late last year, for instance, the company pulled out of Frankfurt, Hamburg and Düsseldorf, citing onerous regulation and a lack of drivers operating on its online platform.

Uber’s low-cost service also has been banned nationwide, though the company is appealing. Uber now only offers licensed taxi services in Berlin and Munich, representing a small fraction of the tens of thousands of taxi drivers spread across Germany.

Mark MacGann, Uber’s head of policy in Europe, says that German taxi unions have lobbied hard to push Uber out of the market, and that the ride-booking service will eventually return to multiple cities across the country.

“Germany may end up being the final frontier of Uber’s success story in Europe,” he said. “I’m confident that Germany will be as big a market for us as the United Kingdom is right now.”

Yet while Uber has so far remained a bit player in Germany, local rivals — often in collaboration with licensed taxi operators — have expanded rapidly, taking advantage of their local regulatory and cultural know-how to succeed just as Uber has been forced to retreat.

As local consumers become more accustomed to using smartphone apps, many ride-booking companies now offer the same services as their larger American rival, including on-demand pickup and estimated prices for each ride, though other benefits like in-app payments are only now starting to be added.

The rise of these German rivals has raised questions of whether Uber, which has deep pockets after its latest funding round valued the ride-booking service at $62.5 billion, can ever catch up with local rivals that have attracted a loyal following despite their lack of comparable financial resources.

To re-establish itself in Germany, Uber must take on the likes of Hermann Waldner.

As the managing director of a Berlin taxi dispatch center, Mr. Waldner has not stood still when faced with Uber’s somewhat stumbling expansion plans, which have shifted from offering primarily unlicensed taxi services to those based on certified drivers.

Mr. Waldner also runs Taxi.eu, a rival smartphone application that relies solely on licensed drivers. Its service has grown rapidly over Germany and is now available in 12 countries from Belgium to Turkey. In total, Taxi.eu says it has around 160,000 drivers active on its online platform.

To compete, Mr. Waldner says, traditional taxi operators must embrace new technologies like smartphone applications, while also banding together across national borders to offer a one-size-fits-all service that can keep pace with Uber’s global offering.

“We need a strong network to fight against Uber,” he said. “That’s the only way to stay strong against Uber.”



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