Uber has a new strategy to drive passengers to its cars and away from the city’s yellow taxis.
The San Francisco-based company, whose cars are called by passengers through mobile apps, announced Monday it slashed prices by 20% for its “low-cost” UberX service through August. Uber boasted the change makes its cars cheaper rides than yellow cabs.
“We really had always wanted to test out what would happen if Uber X was cheaper than a yellow cab,” said Uber NYC General Manager Josh Mohrer.
The price change is only an experiment until the end of August for now, but it could be permanent if successful, according to Mohrer.
“We think making Uber cheaper will make it an even more attractive option,” he said.
Uber is a major player in the for-hire car industry with six bases and nearly 7,000 affiliated vehicles out of the 15,521 black cars in the city, according to the Taxi and Limousine Commission.
A spokesman for Uber said it has “tens of thousands” of driver partners — they pick up fares through Uber, but are not employed by the company — but declined to give an exact number.
The reduction in price means UberX will charge users 40 cents a minute and $2.15 a mile on top of a $3 base fee. The old rate was 75 cents a minute, $3 a mile and a $6 base fare. Drivers get 80% of the fares.
“With shared economy and new technologies offering riders more transportation options, we are committed to maintaining high standards for safety and consumer protection,” TLC Commissioner Meera Joshi said in a statement. “As long as services meet those standards, the consumer can choose which service best serves their needs, whether that’s based on price, vehicle type, base location, or something else entirely.”
The Livery Roundtable, an industry group, criticized Uber’s maneuver as an attempt to push out competing companies.
“Passengers should be worried abot the pricing tactics they will use once they are the only company standing,” said LRT executive director Carolyn Castro said in a statement.
Uber’s desire to undercut yellow taxis, however, did little to worry Bhairavi Desai, executive director of the New York Taxi Workers Alliance, whose 17,000 members are mostly traditional cabbies, with some former hacks now affiliating with Uber.
“I don’t think this is us feeling Uber’s heat. I think this is Uber feeling our heat,” Desai said.
She said a price cut for Uber would be inevitable for a company that has been “engaging in price gouging” — a reference to their higher surge pricing when demand is high, like the first hours of New Year’s Day, to use a recent example.
Desai suggested that drivers would be skeptical at joining a company that will pay them less per ride.
“I’m not sure how many drivers will continue to work for Uber,” she said.
Mohrer, however, maintained that more affordable fares for users will mean more business and trips. He added that drivers were told of Uber’s expectation that they will get better pay with more rides.
“We are truly confident that the change in trips per hour a driver can do will offset the price of a single fare,” Mohrer said.
Mohrer touted the other benefits for drivers, who can work when they wish with flexible hours, pick up fares without dispatchers or avoid handling payment from riders.
“Remove economics for a second, the benefits are all still there,” he said.
