Uber faces new competition in Egypt

The bustling and bustling streets of Cairo and other major cities in Egypt are becoming the scene of a subtle but increasingly fierce competition that is contributing to a shift in transportation networks along the way: from hubs of Local and foreign carpoolers are vying for a slice of the Arab world’s largest market for mobility-as-a-service providers.

Since entering Egypt in 2014, the American company Uber, which operates in 10 cities in the country in addition to Cairo, has maintained a long-standing dominance in the market. But the entry of new global VTC companies since 2020 and the emergence of other alternatives have marked a turning point increasing competition and the range of possibilities.

“[These companies] significantly increase the mobility possibilities of individuals, in particular for young people who do not buy cars at the same rate as their parents. They should no longer be limited by fixed-route mass transit systems,” Maged Dessouky, a professor at the University of Southern California who specializes in transportation systems, told Al-Monitor.

With a population of over 100 million and one of the fastest growing demographics in the region, Egypt represents a lucrative market. According to a 2021 study by market research and consulting firm Grand View Research, consulted by Al-Monitor, the Egyptian ride-sharing services market was valued at $922 million in 2020 and is expected to grow at an annual rate. compound of 15.8% until 2028. This increase will be mainly due to the growth of its urban population, the low rate of vehicle ownership, the insufficient public transport infrastructure and the increase in the penetration of Internet and the use of smartphones.

For years, the Egyptian ride-hailing market has been dominated by Uber, especially after the $3.1 billion acquisition in 2019 of its main competitor in the Middle East – Careem – founded in 2012 in Dubai and since then a subsidiary of Uber operating as an independent brand. . In 2021, Uber had 703,000 drivers in Egypt and operates in 11 cities, covering more than half of the country’s governorates, according to the company’s year in review.

As in many other countries, its beginnings in Egypt were somewhat tortuous. Both Uber and Careem have been embroiled in several legal battles, mainly due to being a new type of business, strict taxi rules in Egypt, opposition from taxi drivers and the rights of drivers, passengers and investors. Yet in mid-2018 Egypt’s parliament passed a law regulating ride-sharing apps, and in 2019 the competition watchdog gave the green light to Uber’s takeover of Careem, paving the way for its smooth running in the country.

In 2017, Uber also invested $20 million in Egypt to establish its Center of Excellence, which is the company’s largest support center in the Middle East and North Africa, and provides support to customers. , passengers and drivers in the region. In 2018, Uber decided to invest an additional $100 million in Egypt over five years to expand all of its services in the country.

“Egypt is indeed extremely unique and a very important market for Uber globally. It is nimble and one of the fastest growing markets for Uber, and it is becoming a technology and innovation hub. with a fertile environment that welcomes new products,” Norhen Ali, Uber’s communications manager for the region, told Al-Monitor. “Since our launch in Egypt, we have provided access to more than 703,000 economic opportunities for drivers and facilitated convenient journeys to more than 13 million customers,” she said.

Yet, since the end of 2020, the picture has changed significantly. The entry into Egypt of new ridesharing apps, such as Russian inDriver and Chinese DiDi, and the emergence of local platforms that have captured market share, including carsharing, have increased competition and options, mainly in Cairo but increasingly in other cities.

InDriver was the first underdog to take the plunge. Launched in September 2020 in Suez, and immediately afterwards in Cairo, inDriver has set up a unique system that allows passengers and drivers to negotiate the price of the trip in advance, unlike the fixed bill of Uber and Careem. DiDi, which was founded in 2012, has some 600 million users worldwide and entered the Egyptian market in September 2021. The company began operating in Alexandria and has expanded in recent months to Cairo, with initially very competitive prices.

“The launch in Cairo, a few months after the start of our adventure in Alexandria, has exceeded our most optimistic expectations and we are proud to be a relevant player in mobility in Egypt in just a few weeks,” said Alia El Khadem. , senior account executive at Hill+Knowlton Strategies, DiDi’s public relations agency in Cairo, noting that it is too early to share statistics, however.

He told Al-Monitor: “Egypt is a key market for technology companies and especially those serving mobility. This is why DiDi started its journey in Egypt, as the first market in the region.

During its pilot phase, inDriver chose not to charge fees, which significantly reduced the final price of rides compared to Uber and Careem and boosted its popularity, similar to DiDi. The successful entry of the two companies led Uber to announce on January 27 an 8.2% cut in its per-mile fee and 6.6% in its per-minute fee.

“We believe Egypt is fertile and friendly ground for DiDi’s powerful value proposition, which through its cutting-edge technology service seeks to demonstrate that users can have better rides without paying more. , and at the same time drivers can make better income,” Khadem noted.

“By offering low fares – which were most likely heavily discounted – these companies quickly gained market share,” Dessouky added. “But tariffs have increased significantly recently and this will most likely impact demand. In addition, governments could increase regulation of these companies, since recent studies in the United States have shown that they have increased congestion by more than 20%”.

Carpooling platforms are also increasingly offering other cheaper services to their users. An example of this is the offer of motorcycle rides, which are not only cheaper than car rides, but also allow you to get around cities like Cairo much faster. Uber, Careem and inDriver all offer this option, as does the Egyptian company Halan. Launched in 2017, Halan has partnered with thousands of tuk-tuks, a popular means of transport in working-class neighborhoods, and motorbike drivers and operates in over 20 cities in Egypt.

Another popular option is the bus service, which is part of the car-sharing market. The Grand View Research study estimated that car sharing had the largest share of car sharing services in Egypt in 2020 at over 48%. He said the increasing traffic congestion in Egypt is pushing consumers to opt for the convenient car-sharing services which are offered at lower cost. Both Uber and Careem offer this service in Egypt, but another top player is Swvl. Founded in Egypt in 2017, Swvl operates fixed intra-city and inter-city bus routes and makes more than 100,000 reservations every day, said Youssef Salem, chief financial officer of Swvl.

“We are in the business of solving public transport problems, and the vast majority of the population is looking for a reliable, convenient and at the same time affordable solution,” Salem told Al-Monitor. “Most modes of private transport – whether owning your own car, driving around or taking a taxi – are largely unaffordable for the vast majority of the population. And therefore being able to have an alternative that is significantly cheaper and therefore much more widely affordable while at the same time being able to have reliability in the convenience of the offering is very appealing to a very broad base of the population,” he said. noted. .

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