Uber Loses Ground In Latin America To Competitor Didi Chuxing

Latin America is becoming a new weak spot for Uber, showing a 2 percent growth, the lowest of any region for the ride-hailing company, Reuters reported on Monday (Nov. 11).

Increased competition in Latin America, mainly from the Chinese ride-hailing giant Didi Chuxing, is being blamed for Uber’s growth slowdown in that region.

Uber and Didi are both backed by SoftBank Group, which has said it planned to heavily invest in the Latin American tech sector.

Didi Chuxing has captured about 30 percent of the market where it operates since launching in Mexico in 2018, Didi employees told Reuters. Mexico is Didi’s biggest presence outside of China.

Didi also gained a presence in Brazil by acquiring the local ride-hailing company 99 last year. Investors see Mexico as a test of Didi’s ability to build a territory from the start. Investors are also looking to see how well Uber holds up with the competition, James Cordwell, a London-based analyst with Atlantic Equities, told the news outlet.

“What happens in Mexico has global significance,” he said.

In a statement to the news outlet, Didi Chuxing said it sees “tremendous opportunity for growth” in Latin America.

“Currently, less than three in 10 Mexicans use ride-hailing, and barely one in 10 are using food delivery,” Didi said. “We’re really excited about where we are at after just 18 months here.”

Uber’s food delivery service Uber Eats is also facing increased competition from Colombia’s Rappi.

In August, SoftBank Group initiated talks with two startups in Mexico — online used car site Kavak and FinTech Konfio.

SoftBank also announced a $5 billion Innovation Fund solely focused on Latin America, and it has been researching startups in Mexico especially. Mexico is Latin America’s second-biggest economy, but its startup sector is trailing Brazil and Argentina. SoftBank is working to change that.

Earlier this year, SoftBank invested about $20 million in Mexican startup Clip. Because of Softbank’s involvement in the Mexican startup sphere, more American investment firms are giving the country a closer look.