After ceding to the competition in China earlier this year, ride-hailing company Uber is shifting focus to Brazil, Latin America’s most populous nation. Introduced in Brazil just over two years ago, use of the app has increased so quickly that the South American giant now represents Uber’s third largest business worldwide, after the United States and India.
The rocketing growth, however, is also a race against time: local governments are moving toward regulating and taxing the company in ways that may hurt its competitive advantage while taxi unions are pushing to ban it entirely.
“There are many issues with Uber now because it’s become a big business in Brazil,” said Fabro Steibel, executive director of the Institute of Science and Technology, a Rio-based think tank.
“It’s too early to know if Uber will be a major problem or a major solution” to the country’s transportation needs.
The US-based company is operating in 37 Brazilian cities, including Rio de Janeiro, the capital of Brasilia and economic powerhouse Sao Paulo. The company boasts 8 million “active users” and more than 50,000 Uber drivers in Brazil. It has benefited from a confluence of factors.
Brazil’s economy is mired in its worst recession in decades, with many riders looking to save money and a ready supply of potential drivers who are otherwise unemployed or underemployed.
A strong car culture in Brazil, similar to the United States, combined with relatively good roads has allowed for growth that would be impossible in other, poorer Latin American countries.
In contrast to the situation in China, where Uber China had a drag-out fight with rival Didi Chuxing before being acquired by Didi in August, in Brazil Uber has no significant competition.
And while Brazil is known for a byzantine government bureaucracy and high taxes, such regulation has yet to catch up with the sharing economy.
Slowly, however, that is changing, which could make it harder for Uber to continue offering steeply reduced rates to capture market share.
Taxi unions nationwide are pushing a bill before Congress that would ban the company. Thousands of drivers from around the country gathered for a protest in Brasilia last month.