The country’s antitrust regulator said on Thursday that competition from Uber Technologies Inc [UBER.UL] reduced the number of rides on cab apps in Brazil by more than half, showing the U.S. ride-hailing service’s disruptive effect in one of its biggest markets.
According to a study by the economic department of the Cade regulator, the shift may be less pronounced as cab apps respond by offering discounts.
Based on private company data from 2014 to 2016, the study concluded that rides on cab-hailing apps fell by 56.8 percent on average in Brazilian cities where Uber operates.
The study estimated that a 1 percent increase in Uber rides drove an average 0.09 percent decline in rides on cab apps, in a sign that Uber was attracting new riders and poaching from taxis.
The results underscore Uber’s strength in recent years as it battled cab-based rivals in Brazil that have drawn foreign investors.
Chinese ride-hailing application Didi Chuxing stepped up its global rivalry with Uber, in January, when it agreed to acquire control of Brazil’s 99, which started as a cab-hailing app and started adding other vehicles in late 2016.
The study found signs that Uber’s foothold may be smaller in deeper markets and gradually diminish over time.
Cade chief economist Guilherme Resende said in a telephone interview that initially, taxi cab apps did not compete on prices. They held them high and tried to take legal action against Uber. He added that over time, however, they began to offer discounts and cheaper options.
He cited evidence showing the drop in cab app rides was more dramatic in regions that Uber had entered more recently.
Resende defended loosening regulations on cab-hailing apps, potentially allowing them to charge variable tariffs and not be subject to rules governing street cabs.
He said that it doesn’t make sense have different rules for different apps. The discussion should not aim at a stricter regulation of Uber, but at looser regulations for cabs, beginning with apps.
Last month, Brazil’s President Michel Temer signed a bill regulating car-hailing apps with loose requirements, in contrast with other countries where Uber faces strong legal restrictions. /Reuters.com