Uber to (re)launch in Madrid this week (Updated)

UPDATE: Uber is again available in Madrid as of March 30.

Uber, more specifically UberPop, was banned in Spain in December 2014. Since then, the company has been trying to adapt to Spanish legislation in order to relaunch its services in the country using VTC licenses.

As the company’s country manager put it a few months ago, “we tried to do too much and too fast”.

On Monday, Uber announced with a tweet and 25 second video that’s coming back to Madrid, possibly under a new and legal model that operates with VTC licenses, which are artificially, and stupidly, limited by Spanish law (there can only be 1 VTC license per 30 regular taxi licenses).

Cabify has been operating this way for years, which hasn’t stopped taxi drivers from complaining about “unfair competition” from the Spanish startup.

While Uber has not confirmed when it plans to launch in Madrid, I’ve heard from several people close to the company that they will fulfill their promise. In December 2015 Uber told El Pais that they would be back in the first quarter of 2016, which ends on Friday. That gives the company three days to relaunch in the Spanish capital.

Good news for consumers.

Uber recognises mistakes in its Spanish strategy, considers move to VTC model, shuts down UberEats

Uber is making significant changes in its Spanish strategy: it will switch to a VTC model and shut down UberEats in Barcelona.

uber spain
In white, European countries where Uber says it is not currently active.

Uber is making significant changes in its Spanish strategy.

The company started operating in Spain a little over a year ago with UberPOP, a service which allows anyone (professional driver or not) to move people around in their own cars. The service has been suspended in multiple countries all around Europe and in Spain it was shut down in late 2014 due to pressure from traditional taxi drivers and Spanish authorities.

Although the company now claims that Spain is one of the only European countries where Uber has no presence, it should also be noted that in other countries it offers services different from UberPOP which are deemed legal under those countries’ legislation. If Uber decided to operate in Spain following a VTC model (vehículo con conductor or black cars) it totally could… but up until now it hasn’t decided to do so.

Up until now is the key phrase here, because the company is now saying that it will soon start operating in Spain with VTC licenses, like competitor Cabify has been doing for years. This VTC model is now coming under pressure from taxi drivers as well, as they consider these services (and pretty much any kind) as unfair competition.

In an interview with El Español the company declined to give specifics on when it will start working again in Spain. In the same interview, Uber’s boss in Spain, Carles Lloret, also recognises that the company “tried to do too much and too fast” in the country.

To try to change Uber’s perception amongst consumers, politicians and the transportation industry, the company has launched a #MovimientoUber campaign to try to change the laws that regulate VTC services. As of right now, VTC licences are limited by law and there can only be 1 per 30 traditional taxi licenses.

As part of this announcement Uber is also shutting down its meal delivery service UberEats in Barcelona.

Too little to late to build a new brand and image in Spain?

Uber is off to a good start in Spain: Madrid and Barcelona among its fastest growing cities

In its first 200 days, UberPOP in Madrid and Barcelona has grown 3.7 and 3.5 times faster than in other mature cities such as London, San Francisco or Paris. Is this a sign that Spaniards are welcoming Uber?

uber spain growth

If you’ve been paying attention to the news this week you’ve probably heard a few things about Uber, the San Francisco-based transportation company. Uber has been involved in a scandal regarding its privacy policies and alleged plans to spy on journalists by tracking their whereabouts using the app.

This represents one more scandal in the history of the company, known for its aggressiveness and ruthlessness in its global expansion ambitions. However, there’s also the business side of things, and there’s very little doubt that Uber is expanding at rates never seen before and building a very strong business that’s supposedly about to reach $2 billion in net revenue in 2015.

This growth is also visible in Spain. The country launched its UberPOP service in Barcelona before the summer and in Madrid in September. Since then, both Spanish cities are amongst the fastest growing cities in the history of Uber, with that the company calls “unprecedented growth in trips”.

Niall Wass, former chief executive of Wonga, was yesterday in Bilbao to give a presentation about the company’s business in Spain. As visible on the picture above, in its first 200 days UberPOP in Madrid and Barcelona has grown 3.7 and 3.5 times faster than in other mature cities such as London, San Francisco or Paris at the time of launch.

While this growth is impressive, it’s also worth noting that the launch in Madrid and Barcelona took place much later than in London or Paris, at a time when Uber was a well-recognized company and with the help of taxi unions and protesters that ended up putting Uber in the front page of many publications and newspapers, even if it was for the wrong reasons.

We’ve reached out to Uber to know more about its growth in Spain but the company declined to provide more details. They did say that growth in Madrid has been “brutal” so far.

It’ll be interesting to see how proposed laws to regulate its business impact its growth, but it seems that Spaniards are, at least, giving Uber a try.

However, the question remains about the need for Uber in European cities with good public transportation systems in place. Is it really the right answer to the taxi systems in place?

Photo | @ejoana

Spain is trying to push Uber out of the country: drivers will face fines up to €18,000

Madrid and Barcelona are trying hard to get rid of Uber. As a result of recent changes in local transportation laws, UberPOP drivers are subject to €4,000 to €18,000 fines and the immobilization of their cars.

uber fines spain

The taxi industry in Spain is lobbying hard to get Uber out of the country, and our public institutions are helping them achieve that. Madrid’s local government has announced that Uber and its UberPOP drivers will face penalties starting at €4,000 and that can be has high as €18,000 per driver and vehicle.

Local police forces claim that they will start inspecting vehicles that belong to the company. How they will do this in a city with thousands of cars is a different question, and authorities haven’t given any details on how they will try to find Uber cars in the streets of Madrid.

Fines will start at €4,000 and could reach €18,000 for recurring infringers and lead to the immobilization of their cars.

According to Spanish law, private drivers are not allowed to use their own cars to provide transportation services for-profit. Uber’s representatives in Spain have previously claimed that the money earned by UberPOP drivers only covers costs associated with their cars, something that has been refuted by local authorities. In an interview given to El País this weekend, Uber co-founder and CEO Travis Kalanick claims that this is exactly what needs to be specified in Spain.

“That’s the real debate. What the cost of moving a car is”, Kalanick says when asked about whether those costs should only include gas or also take into account insurance, cost of amortization or maintenance.

Barcelona changes its laws to fight Uber

Things in Barcelona are not looking much better for Uber. La Generalitat, Catalunya’s regional government, has decided to change its current laws to stop Uber and protect the taxi industry. With the changes proposed UberPOP drivers will not only face fines, but can also see their cars immobilized if they don’t have the licenses required for non-taxis to offer transportation services in Spain.

Private transportation vehicles (those outside of the taxi world) need VTC licenses in Spain to operate. The main issue is that current regulation limits the number of such permits to a thirtieth of all taxi licenses, establishing a significant barrier of entry for new companies in the space.

UberPOP relies on private drivers and vehicles to offer its services in a way to avoid having VTC licenses. If Uber were to launch services like UberSUV, UberX or Uber ‘black cars’ it would have to get approval from the government via those permits. That’s exactly the way Spanish competitor Cabify operates.

As I’ve written in the past, UberPOP might not be the perfect solution to disrupt the antiquated taxi industry we have in Spain. However, it’s appalling to see local governments change laws this fast to protect taxis at a time when educational, banking and other financing laws take forever to get approval from public institutions.

The taxi situation in Spain is a mess. But, is UberPOP the right solution?

Uber (UberPOP) is now available in Madrid in Barcelona. It’s cheaper than traditional taxis but… is it the solution to Spain’s transportation problems?

uber spain

Unless you’ve been hiding under a rock for the past 24 hours you’ve probably heard that UberPOP is now available in Madrid. The service allows anyone -who has gone through background checks- with a car to become a taxi driver, charging lower rates than traditional taxis while Uber keeps a 20% commission.

UberPOP has been available in Barcelona for several months and taxis have complained vastly about the service. Why? For two main reasons: because the taxi industry has been overprotected for decades by governments and local entities and because UberPOP, according to Spanish legislation, is currently illegal. The law forbids private individuals from offering transportation services for profit, and this is exactly what Uber’s service does.

Unless, of course, you believe what Uber has been telling Spanish media. Uber claims that drivers are not making any money and that they are simply “covering the costs” associated with the maintenance of their cars and rides. Something that conflicts with what various UberPOP drivers have told me. I’ve used the service a handful of times in Barcelona and drivers seem pretty happy with it, given that it allows them “to make some money” now that they don’t have a job, work fewer hours, etc.

It’s a totally different scenario from Blablacar, which also claims that passengers’ money helps cover costs associated with the transportation. And it’s different because it makes sense to fill up empty seats if you’re going to be traveling for various hours, but when you’re driving around town for 4 to 5 hours the scenario changes dramatically. You don’t do that to “cover costs”, but to make money. And Uber knows this too.

The situation in Spain: Fewer taxis per capita, fewer consumers

The total number of taxis in Spain has remained somewhat stable over the past two decades. In 1994 there were 72,071 taxis in the country, compared to 70,623 in 2012. Only in Madrid there are more than 15,000 active taxi licenses.

taxis spain

However, population in Spain has increased significantly in that time. According to various studies the number of taxis per 1,000 residents has decreased significantly since 1994. And taxi drivers themselves have previously claimed that there are too many taxis in cities like Barcelona and Madrid, which should push prices down for customers. This is hard to prove, given the lack of analysis of the evolution of taxi prices in Spain.

However, we do know that there are many more taxis per 1,000 residents in Spain than in other European capitals. And it’s also true that the economic crisis has affected public transportation negatively: the number of Spaniards using the tube and buses has decreased by 15,8% and it only makes sense that the same has happened to taxis.

This could imply two things: that taxi prices should have decreased lately or that consumers are waiting for cheaper alternatives to emerge. Enter UberPOP.

Is UberPOP (or Uber) the solution to Europe’s taxi problems?

Uber is an American company and it adapts perfectly to the way American cities are built. Transportation in the US sucks except in a handful of cities -New York or Boston, for example- and being able to hail a taxi from your smartphone when there are very few alternatives is good for all parts involved: Uber, consumers and drivers.

Does the same apply in Spain or Europe, where public transportation works well in big cities? I don’t think so. Soon after UberPOP’s launch in Spain I had a small conversation with a Uber representative in Barcelona. I asked why Uber decided to start their operations in the city with UberPOP and not UberX or any of the other high end services the company offers. And he intelligently said that he did not think Spaniards were looking for expensive means of transportation, which, theoretically, would imply that UberPOP would conquer the Spanish market.

However, there’s one big issue with UberPOP and the way it works in Spain, at least to date. It’s indeed cheaper than taxis and other services like Cabify, but my experience tells me the service is much worse than the one traditional taxis provide. Cars in bad conditions, drivers who do not know the cities, few cars available at all times which implies longer waits, etc. And I’m not the only one who has experienced this, as many people I’ve talked to who have used UberPOP in Barcelona have had similar complaints.

Cheaper is good, but if the value proposition is worse… what’s the point?

MyTaxi or Hailo work just fine

If prices are lower but the quality of the service is better, one could argue that being able to use your smartphone to hail a taxi or car is better than other available options in the market. This is exactly what happened in the US.

The main issue is that apps like MyTaxi or Hailo work just fine in big Spanish cities. As UberPOP, they allow you to pay with your smartphone and, unlike UberPOP, the number of taxis associated is much higher. An example:

uberpop spain

It’s true that UberPOP has just launched in Madrid and the number of cars will probably only increase in coming weeks. It’s also true that the taxi industry needs to be deregulated and taxi licenses should not cost up to €200,000. However, the question remains. UberPOP is cheaper, the quality of the service is worse and apps like MyTaxi or Hailo work just fine and have a much higher number of cars. So then, what’s UberPOP’s real value proposition?