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April 2017

Pushing hack in Mexico’s human anthill a daily grind

by John Proos

Last week I was in Mexico City, hosted by my wife’s niece. Her son, Fernando, age 24, drives Uber. His uncle has been a legal cab driver in Mexico City for 25 years and his son-in-law is in turn another Uber driver. All live within the same family compound and I de-briefed them all plus other Uber and legitimate cab drivers dropping by. Herein are some random details.

Mexico City competes with Shanghai and Tokyo for the title of the world’s most populous city. Mexico City is among the most dangerous cities in the world, whereas violent street-level crime is almost non-existent in the two oriental cities. The population is in the twenty million range. Mexico City has an estimated 150,000 taxis; the legal ones and the bandits. But the estimated 30,000 bandits are also regulated. They have to pay bribes to high officials at city hall for the requisite papers telling police to lay off them. Otherwise, no bandit could exist. The city is crawling with opportunistic, entrepreneurial police. Just try driving ten minutes in Mexico City on the day your license plate number is not allowed to circulate. The police will be right on your tail. Big bribe or big tow bill. It is impossible to determine how many Uber drivers operate in Mexico City. Maybe a hundred thousand working anywhere from a few hours to full time.

Ubers are very popular in Mexico City and in a dozen other large cities. In all the large northern industrial cities, Uber costs much less than taxis. My daughter goes regularly on business to Cd. Juarez, Mexico’s fourth largest city, with a population of five million. In the past I have told her that Uber is “el enemigo.” But Uber charges 90 pesos from downtown to the airport. That is equivalent to seven Canadian dollars and the distance is 18 kilometers. A taxi charges 350 pesos. Plus, with Uber, you get a clean car, a polite driver and a water bottle. It is a no brainer. How can I tell her to reject Uber over wider moral principles? There is sporadic violence against Ubers in Cd. Juarez and the driver often tells the passenger to get in the front seat. You have to wonder how the Uber drivers can make a profit at such low rates. One factor is that gasoline in the all the cities on the American border is priced considerably cheaper by the government. But, due to corruption, even these discounted gasoline prices are a quarter higher than in wealthy America.

On the other hand, the dynamic in Mexico City is different and Ubers there cost about 20 percent more than taxis. But customers swear it is worth it to get a clean car with a polite driver and a small bottle of water. In Mexico City, taxi drivers regularly rob their passengers, often at gunpoint. So with the Uber app identification you are less likely to be robbed by your driver. Still, criminals have innovative minds and explore new fraudulent ways of using Uber apps.

The meter drop in Mexico City is the equivalent of 70 cents Canadian and you can go a long way for five dollars. So Uber can set their prices at 20 percent higher. Just like in Toronto, many Mexican cabdrivers drive run-down, filthy, smelly cabs and are themselves rude and oblivious to the fundamentals of public service. With Uber, the driver has to behave or he will be graded low by passengers and will be thrown off the app. Uber cars can only be six years old.

I was there on a weekend. Fernando told me he made 800 pesos on Friday night and 1050 pesos on Saturday night. 1050 pesos is about $70 Canadian dollars. On a slow weekday, income is in the 350 pesos range. This is real good money in Mexico, where minimum wage is under a hundred pesos a day. These figures are somewhat suspect, as I asked him to deduct all expenses; gasoline, maintenance, water bottles, taxes, depreciation, bankster-financing, etc. If I get really intrusive and nosey, I could very well come up with a different bottom line profit figure.

Fernando bought a brand new Volkswagen Jetta to drive as his Uber. He purposely avoided buying a Nissan Versa or Volkwagen Vento, the most popular Uber models, often financed by middlemen. They are too conspicuous and identifiable as Uber scabs, especially with the smart-phone GPS prominent on the dashboard. In a Jetta, it can be hidden better. A Jetta in Mexico costs 220,000 pesos or about $16,000 Cdn. And this is the full price – no added taxes, freight and other small-print items as in Canada. But there is no cheap financing. With 20 percent down, over four years the 220,000 peso price balloons to 380,000 pesos or about $28,000 Cdn. This price does include the compulsory insurance, but it still makes for a huge cut for the banksters. That is a lot of money to make up on the mean congested streets at low rates and represents a huge risk.

His uncle, Ulysses, has been driving a legal cab for 25 years. He is satisfied with a clear profit of 300 to 500 pesos a day, about $35 dollars Cdn at the high end. He says his business is down due to Uber by about 10 percent. In the huge city, it is very difficult to keep your statistical moorings. Even in Toronto, it is conjectural how many cabs are sitting idle, how many are now only single-shifted and how many drivers and owners have tossed in the towel. In the Mexican human anthill, it is even more difficult to come up with reliable figures . There is sporadic wrecking of Uber vehicles by irate cabbies. Usually the scene is uploaded onto YouTube. There has been some organized blocking of streets by cabdrivers. But every other day downtown streets are blocked by some group of protestors. The government, afraid of creating martyrs and being accused of human rights violations, lets these demonstrations run their course.

I was told that Uber drivers who got in early were making really big money. Uber skims off 25 percent of each ride. For reliable permanent drivers, this can be reduced to 20 percent. Mexicans resent sending these percentages to Silicon Valley oligarchs. Eventually, the market got saturated with drivers, as Uber is an unsustainable pyramid scheme. Incomes came way down. Does this sound familiar? But at first Uber paid huge bonuses of hundreds of dollars a week to drivers who recruited other drivers. Yes, they were cutting their own throats in the process. But if they didn’t do it, someone else would. Such is the race for the bottom, while Uber rakes in billions. This was similar to Toronto, where Uber started out using legal cabs to build up their customer base. In effect, they sold cabbies the rope to hang themselves. And where are these cabbies now that Uber-X has vacuumed up their former business? Mexico City Uber drivers can work other company apps at the same time. Cabify is prominent there.

In Mexico City only two million people have credit cards. Uber app users are asked to fill in “method of payment”. There they can pay by credit card, debit or cash. If cash is the option, the Uber app makes the adjustment in the driver’s account. I was told that one in ten riders pays cash. Drivers prefer cash, as sometimes tips are included. Of course Uber drivers do look for street pick-up cash fares, just like in Toronto. There is also Uber-pool to save even more and Uber luxury cars for indulgent show-offs. The ridiculous Toronto taxi “reform” allows cabdrivers to charge a $25 dollar clean-up fee to anyone who pukes in the cab. Try to collect that. In Mexico City, Uber charges the customer’s account 1,200 pesos or about $85 Cdn for puking in the car. This comes automatically off the passenger’s credit card. Fernando told me three people had puked in his car since he started six months ago. I correctly guessed that they were young females. The North American debauchery is spreading rampant in Mexico. I asked Fernando if he had learned to carry readily-available puke bags in his car. He was non-comital , leaving me with the thought that maybe he preferred someone to puke in his car to get the automatic vomit fee. It is more than a shift’s income to put up with the stinky inconvenience.

Just like in Toronto, Uber drivers in Mexico go into feeding frenzies at weekend bar closing times, due to big surge-pricing. But it was nowhere near the surge extremes of three or four times as in Toronto.

(Editor’s note: This concludes part one of John Proos’s feature on the taxi business in Mexico. Part two will appear in May edition of Taxi News.)

 

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