Monday, March 21, 2011

Car2Go and Taxis

(Note: this article has been signficantly updated since the original posting.  - Dave)

Logically, you'd think that car2go's one way service would be a threat to taxi companies. And at least in one European country you might be right.  According to a recent article in Die Welt am Sonntag, taxi drivers in Germany aren't feeling too threatened by car2go.

According to the Feb. 1, 2011 article by Steffen Fründt, the taxi business in Germany is cashing in.  50,000 taxis driven by 22,500 operators (many are one-person companies) and did more than 3.5 billion Euro business in 2010.  (They do this driving about 2.6 hours of the 9.5 hours average shift, the article says.)  And taxi operators in Germany have done a good job using regulations to keep others, such as van services, from poaching their core business.  As in other countries, taking people to airports and transporting seniors seems to be a major part of their business.

In the article Thomas Gratz of the Taxi- und Mietwagenverbands BZP (Taxi and Rental Car Association) is quoted saying he doesn't think car2go poses much of a threat.  Given that the majority of car2go users are between 18 - 35 years old, the article explains:

"The highest trump in the sector was the demographics, "says Thomas Gratz of the taxi association. "There are more old people, and are more likely than the young to rely on a taxi." Seniors become loyal clientele for taxis, which can be driven to shopping, hairdressing, opera or dialysis. "In rural areas, ambulance runs make for some entrepreneurs from 70 to 80 percent of the business," says Gratz. The biggest competitor to the taxi industry was the DRC.

Gratz was quote saying that the biggest threat to taxis are van services, which are currently restricted, getting a foothold in Germany.  No doubt he's right but it seems to me likely car2go will have an effect.  

Meanwhile in Spain

Thanks to local intel, I've been made aware that taxi drivers in the city of Valencia are feeling a lot more threatened by the possibility of car2go coming to that Mediterranean coastal city.  Following initial conversation with car2go last November, the President of Valencia Taxi Federation and came out strongly opposed, according to the El Mundo newspaper in Valencia.  
"We do not want this project to go forward because it proposes a service that goes directly into competition of the taxi industry, "said Juan Antonio Guardeño, the head of the federation.  He explained that taxis have experienced a 40% drop in business as a result of economic crisis, which has reportedly affected Spain much worse than Germany.
Reader response to the taxi drivers' complaint on the El Mundo web site seems mostly in favor of having a car2go option.  Said one writer: "It seems ridiculous for the taxi drivers, or whoever, to protest improved citizen services. I am sure there will be many users of this service as soon as it is started.  I'm sick of the blood sucking taxi drivers who let other car and van delay them in order to scrape a few pennies more my pocket - as if they don't already have enough."

My 2¢

It would appear the taxi drivers in Valencia need to do a little PR, at least with one customer!  And as a commenter in Valencia he taxi observed, the taxi companies did not oppose a one-way bike sharing system, which, arguably, will affect their business, at least slightly.  

Any new innovation that "gets traction" (to use a car metaphor) results in winners and losers.  My guess is that, overall, taxis will lose less than they think from one-way carsharing in their cities.  But, I can certainly understand that it's in their interest to do what they can to minimize these losses.  And it is ultimately the duty of city governments to do balance competing interests to do what's best, overall, for their city.  

Overall, car manufacturers will be the big losers - but they're already watching the decline in sales in their home markets and thinking about options — such as one-way carsharing.