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What will car-sharing app Uber do next?

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It now has a market value far higher than Hertz and Avis

Uber is one of the most divisive and controversial brands to emerge from the sharing economy and the aftermath of the global economic crisis, causing disruption to urban transportation, including taxi firms and car rental players, writes Caroline Bremner, head of travel and tourism research at Euromonitor.

Despite the controversy it causes, Uber – a taxi and rideshare app, founded in San Francisco in 2009 – has gone from strength to strength. By the end of 2014, the company was valued at US$40 billion, following a new round of fundraising, with it doubling its worth in just six months. Uber now has a value several times higher than that of traditional car rental players, such as Hertz and Avis, and even that of some airlines, according to the Financial Times.

Since starting its international expansion in 2011, Uber has proliferated across the world and operates in 250 cities in 53 countries as of early 2015. In terms of app downloads, the company reached number one in 79 countries in January 2015.

Uber has become synonymous with car sharing, in the same way that Airbnb has with private rentals. Car ownership is on the decline in developed markets, Bremner says, having peaked in the boom year of 2007. New car registrations in Western Europe and North America are falling.

Some city governments are against Uber’s business model because of claims it encourages the black economy in the form of tax avoidance, lack of regulation, fraud, unregulated payments and a lack of consumer protection.

But Uber says it fights for the liberalisation of anti-competitive taxi markets, creates jobs, reduces car ownership, supporting the sustainable urban economy, and opens up services to lower middle-income groups.

It will now need a more conciliatory approach with local governments, which means being part of the urban transport solution. One way is to become more involved with transport solutions in urban areas, and Uberpool is an interesting concept that may endear its services to local regulators trying to cut congestion and pollution.

Uberpool is where Uber algorithms match passengers travelling on a similar route and pair them up together in one car to split the cost, rather than them hailing separate rides. Allowing passengers to share rides will cut their travel expenses by up to 40%. Uber claims that one million cars will be taken off the streets of New York as a result. The service has already been launched in San Francisco and New York, so regulators will be watching its progress to see the impact of such technology.

Euromonitor

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