Business / Corporate | FOCUS

App-based car hire service Uber making waves in Tokyo

by Keiichiro Otsuka

Kyodo

The smartphone-based Uber car hire service, which was born on the U.S. West Coast, has spread to a number of other cities in North America such as New York as well as other parts of the world, including Tokyo.

Its success in reaching more than 210 cities, achieved in the roughly four years since it was launched, is a gauge of the support it has gained from consumers in these markets. It has also led to fierce competition with taxis and new entrants offering similar services.

In New York, home to thousands of Yellow Cab taxis, users of Uber’s application can order a nearby car to come to a designated location using a GPS-enabled smartphone. The app provides the name of the driver and the expected time of arrival.

Fares are paid by credit card. The user and the driver rate each other on a scale of five. Poor customer ratings could lead to poor business for a driver. Feedback on riders measures their reliability as a customer and how they behaved during the ride.

Uber launched full-scale operations in Japan in March with a car hire service named UberBlack. Its fleet includes BMW 7 series sedans and Lexus models.

Fares tend to be slightly higher than regular taxis in Japan but customers appear to be using them nonetheless.

“I feel safe as a customer and there’s also that extra touch of being picked up by a black luxury car,” said a female worker at a major Japanese manufacturing company who hired the service.

Since Aug. 5, designated “taxi day” in Tokyo, Uber has also been offering a taxi hailing service dubbed uberTAXI that allows users to hail a regular taxi and settle the fare via the app. The service, which began in the United States, also helps taxi drivers increase the number of riders.

Competition is expected to heat up with other app-based car pickup services already operating in Japan such as Nihon Kotsu Co., a taxi and hire company, and Tokyo Musen, which serves scores of taxi companies.

In New York, the rating system addresses rider complaints about drivers’ behavior such as refusal to pick up a customer for a short-distance trip. Since it started full-scale operations in 2010, its ridership has been growing rapidly in the city.

One driver who started working for Uber this year also expressed satisfaction, giving credit to the service for securing a stable source of business from passengers.

Uber has been drawing keen interest from investors. Current stakeholders in the company include Internet giant Google and investment bank Goldman Sachs. The firm’s valuation was estimated at $18.2 billion in June.

In the United States, Uber is facing competition from Lyft, which also originated in San Francisco. The Wall Street Journal said the “fiercest battle” in the U.S. information technology industry may well be between these firms. “Forget Apple vs. Google,” the paper said in August.

Lyft cars, which have pink mustaches attached conspicuously to their front grilles, basically offer ride sharing with other passengers to keep prices low.

Competition is intensifying not just in winning customers but also in securing drivers. In May, Uber sent an offer of $500 to all its drivers for referring a Lyft driver, and $1,000 for signing up a Lyft contractor tasked with training new drivers.

As competition grows more intense in the car-hailing-service market, British startup Hailo Network Ltd. said on Oct. 14 it plans to close up shop in North America.

Meanwhile, Uber is facing a challenge from conventional taxi operators who have lodged protests and lawsuits over a loss of business.

In Frankfurt, a German court temporarily banned Uber’s ride share and threatened to levy a penalty if the ban was violated. But the court lifted the ban in September.

Acknowledging the challenges his company faces, Uber CEO Travis Karanick said: “We’re getting bigger, and we have to find that new balance.”

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