By June 1, 2018

Can Uber Survive USD 175 Mn Taxify Assault?

By June 1, 2018

In recent months, Uber has faced a great deal with leadership changes, unresolved legal battles, lost traction in major territories and a failed driverless trial. Nevertheless, Uber has been one of the single most valued contributors to the transport industry and global mobility as we see it. However, Taxify, who is snapping at their heels seem to have found a groove upping the ante in their global rivalry.

With a funding round recently concluded to the tune of USD 175 Mn, Taxify has amassed a war chest that not only raises their valuation to the billion-dollar mark but also gives them the strategic flexibility to lay an assault on Europe, the Middle East & Africa (EMEA). These are all territories where Uber had enjoyed first mover advantage but is slowly losing its grip. Daimler AG took the lead in a round of investment that included Korelya Capital, Taavaet Hinrikus, and Didi Chuxing.

Some might look at this funding round purely as a Daimler investment in Taxify, however, the German-based, global automotive giant has been involved in backing a lot of Uber’s competitors in Europe and Asia. They are the majority shareholders of MyTaxi in Germany, England, Ireland and Spain, as well as investors in Chauffeur-prive in France and Careem in the Middle East & Africa. In all these territories Daimler is competing directly with Uber, and now as an investor in Taxify they are only set to sink their teeth even deeper into the market Uber has enjoyed for a long time.

Uber and Taxify have had their fair share of competition, and in markets like South Africa where Uber commands a staggering 25% commission per trip, Taxify reentered the market on a 5% commission and has since increased to 15% according to www.fin24.com. This model has not only made the ride-hailing app a more appealing competitor to drivers but also allows them to offer much cheaper rates to customers per trip in comparison.

It has seemingly become a trend that the go-to tactics in these wars are pricing strategies, with some ride-hailing apps making it cheaper for customers whereas others prioritize the returns for the driver. In both cases, one would assume a win-win situation, but having interviewed Taxify drivers in Cape Town, it stands to reason that some have opted to migrate from one platform to the other or employ some form of arbitrage leveraging the use of both apps.

However, a peculiar competitor also joined the Fray in Taxify’s last round of funding – Didi Chuxing. Didi forced Uber out of the Chinese market, and it seems that the Chinese ride-hailing company is through their investment in Taxify, making a total play at the global ride-hailing industry. If for argument’s sake Didi – valued at USD 60 Bn – acquired Taxify in totality, they would not only surpass Uber as a global competitor, but they would inevitably control the market.

If Uber is to maintain its strategic position within the ride-hailing industry, it must fight a war on several fronts. In Egypt, they were recently successful in a court battle that saw them win a decisive victory, regulating their operation in the North African country. Closing out legal cases like this will allow them to consolidate their presence and pave the way for their other services such as Uber Eats. The Uber Eats service certainly gives them an edge and has been a strong performing component of their business model.

Uber is no longer competing with Taxify as usual, new battle lines have been drawn through the additions of Didi and Daimler and watching how this unfolds will be an interesting spectacle.

Hi! Here’s a little something for you. In the first edition of The African Podcast by WeeTracker, get access to the formula behind ‘Building a $ 100 Mn company (twice) in Africa’ with the co-founder of Andela & Flutterwave – Iyinoluwa Aboyeji. The exclusive podcast goes live soon, Subscribe here to listen to it.