The Federal District government (GDF) has decided it will regulate on-demand private car hire services like Uber and Cabify, despite the opposition and claims of unfair competition by taxi drivers’ organizations.
Uber and Cabify celebrated the publication of the new regulations as an endorsement of their operations in Mexico City, but some observers have expressed reservations.
Under the new law, car hire companies that provide their services through a mobile app will have to pay a yearly fee of 4,617.50 pesos to the Mobility Secretariat (Semovi). Each car will have to buy a yearly permit costing 1,599 pesos, and the vehicles will have to be inspected once a year by the same secretariat, costing another 1,607.50 pesos.
It was also decided that such app-based services will have to donate 1.5% of their per-trip fees to a “taxi, mobility and pedestrian” fund. In the case of Uber, this would amount to over 16 million pesos per year.
Within the new regulation there is one particular rule that hasn’t been well received. It stipulates that the vehicles used by the car hire companies must cost 200,000 pesos or more.
Manuel Molano, director of the Mexican Competitivity Institute, considers this a mistake “as it hinders natural market competition. The authorities should only be interested in encouraging the market, but they don’t seem to understand this.”
Molano said too that management of the “mobility” fund could be worrisome “because the GDF hasn’t been transparent in the management of parking meters. We don’t know what the fund is being used for, if they are keeping it. We will have to pay close attention to the government’s performance.”
Cabify CEO Ricardo Weder welcomed the GDF decision, but he also believes the vehicle price limitation will inhibit the growth of the market. [This rule] goes against the free economy and the law of supply and demand.”
Uber spokeswoman Ana Paula Blanco told the EFE news service “we are very excited. The fact that one of the biggest cities in the world has created regulations while keeping consumer opinion and the law of supply and demand front and center of the discussion is a turning point.”
For their part, taxi drivers’ organizations haven’t received the news well. They claim that the new regulation leaves them at a disadvantage and are considering filing an injunction against it.
The taxi drivers want a regulated ratio of taxis to private cars of 1 to 50, and a minimum value per car of 350,000 pesos rather than 200,000.
Angry that the rules were not tougher, the taxi drivers have hired legal advice and are considering marching in the streets of Mexico City in the next few weeks. Drivers’ union leader Ruben Alcantara said they could also go on strike, and criticized the government for a “lack of respect” towards taxis.
“We didn’t expect the city’s government to react so violently towards us,” he said.
Mexico City is the largest in the world to implement regulations governing the car hire services, and the first in Latin America to do so.
Uber opened in Mexico City in 2013. The company says the metropolis is one of its fastest-growing markets globally with 500,000 customers and over 10,000 drivers, some of whom share cars.