For Uber, Latin America was a safe haven for a long time, but in the latest financial results of the company, it turned out to be one of the worst regions for the company. This is due to the fact that registered growth of just 2%, thereby becoming the weakest spot in the financial results of the money-losing company. The primary reason behind this is the Chinese ride-hailing company, Didi Chuxing, which has rapidly grown in Latin America. The same investor has backed both Didi and Uber, the Japanese Conglomerate SoftBank Group. This highlights how the investments of the company sometimes clash.
It is specially true for Latin America as the Japanese behemoth has pledged to invest billions in the region’s blossoming tech industry. The most pronounced infighting between the two ride-hailing companies can be seen in Mexico because that’s where Didi is giving serious competition to Uber. According to former employees of Didi, since its launch last year, the company has managed to grab almost 30% market share in the cities where it is operating. There is a fluctuation in the market share and Didi’s share goes above and below this mark, depending on the city.
The firm’s food delivery service, Uber Eats, is also faced with intense competition from Rappi. Earlier this year, a total of $1 billion was pumped into the Colombian company. Brazil is another area where Didi maintains significant presence and is operating under the brand name, 99. This was a local-ride hailing company that the Chinese firm had bought last year. However, according to analysts, the real test of Uber’s ability of defending itself and its turn and Didi’s ability of building its operations from scratch is in Mexico because it can have a global impact. In a statement, Didi said that Latin America presented an opportunity for growth.
Didi said that as of now, three out of 10 Mexicans use ride-hailing services and food delivery is used by 1 in 10 people, which makes their position in 18 months a major achievement. Apart from that, investors are also keeping an eye on how these competing investments are being managed by SoftBank. The recent fallout due to its investment in WeWork has had a big impact on the conglomerate. The shared workspace provider pulled out from their initial public offering.
Under the Didi brand, the company’s presence in Mexico spans 32 cities, which is its biggest outside of China. The growth of the company has taken its toll on Uber, which is rather obvious. The region was the worst performing for Uber in the first three quarters of 2019. However, the results have also been hit due to the economic and real weakness of Brazilians. Even food delivery is not safe from the competition amongst investments by SoftBank as Didi is also planning to introduce a service in Mexico. Even though both Rappi and Uber are present in this market, it only comprises of 14% Mexicans.
As far as Uber is concerned, competition is quite a new phenomenon for the company in Mexico because it held 87% share of Mexico’s ride-hailing market before Didi’s arrival.
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