Uber Technologies Inc. struck a last-minute deal to avert a cap
on new car-service vehicles in New York City Wednesday, a
limitation the company claimed would stunt its growth in the
country's biggest taxi market.
Smartphone-driven Uber had launched a furious lobbying,
advertising and social-media campaign to get the city's leaders to
shelve a proposed yearlong cap on new for-hire vehicles, which city
officials worry may be contributing to congestion and
pollution.
Uber, which faced a City Council vote on the cap as soon as
Thursday, agreed to participate in a traffic study and turn over
detailed trip data. City officials said they may seek a cap
later.
The deal appeared to end what had become an increasingly nasty
fight between the car service and Mayor Bill de Blasio, and it
added New York to a list of major cities around the world where the
San Francisco-based company has faced—and so far
avoided—limitations on its growth.
Faced with a potential cap, Uber took aim at New York's liberal
mayor, challenging him to a debate, attacking his progressive
credentials in television ads and even needling him on its app with
a "de Blasio" feature that says "no cars available."
At stake was Uber's bite of the Big Apple's chunk of the
country's taxi market, and traffic in Manhattan's central business
district, where city officials say ubiquitous black cars-for-hire
are swarming the already congested streets waiting for fares.
IBISWorld Inc. estimates the U.S. taxi and limousine market's size
at $12 billion.
Uber and other car services have more than 63,000 vehicles on
the streets of New York, their telltale special license plates in
the mix of buses, delivery trucks, and yellow cabs. The overall
fleet is up 60% since 2011.
The boom has been fueled in large part by Uber, which launched
in New York City in 2011 and now counts about 20,000 vehicles in
the five boroughs. The company's fleet dwarfs that of New York
City's approximately 13,600 yellow taxis.
While Uber cars are rolling around the globe, much of the
company's fortunes are tied to New York, its largest U.S. market,
where its drivers have ferried more than 2.5 million customers
since it launched. Key to its strategy has been cultivating grass
roots support.
Uber drivers say they appreciate their jobs' flexibility, which
enables them to set their own hours and how much they earn. Some
even expressed support for the proposed cap—to protect their own
incomes. "We're going to have a lot of drivers and not going to
have jobs," said Predrag Kumanovic, 34 years old, a yellow-taxi
defector who now drives for Uber.
Uber's bare-knuckled tactics marked a change in its tone in New
York City, where both the company and regulators say they once
worked on friendlier terms. Upon the urging of New York officials,
the company has added a service with wheelchair-accessible vehicles
and, during emergencies, agreed to cap fares charged by its "surge
pricing" system.
When it launched in New York City in 2011, Uber ditched its
common "ride-sharing" model under which nonprofessional drivers
accept rides the company arranges via its smartphone app. Instead,
Uber acceded to the Taxi and Limousine Commission's demands that it
set up shop as a regulated black-car service, with city-licensed
professional drivers, vehicles and bases.
But the company has vigorously battled any caps, arguing that
system undermines its elastic supply-and-demand model. As demand
for its service grows in each city, Uber's system entices more
drivers to sign up and fulfill that demand, keeping down wait
times.
In New York, Uber says it is seeing about 25,000 new riders a
week. The average wait time for pickups in Manhattan has fallen to
less than three minutes, down from more than 10 minutes a few years
ago, according to the company.
"Demand is growing really fast," said Josh Mohrer, Uber's
general manager in New York. "If supply doesn't grow in lock step
with that, the service will get unreliable."
In early 2014, Seattle became the first city to impose a cap on
Uber and its ride-sharing competitor, Lyft, but the city eventually
lifted the cap in a compromise. In May, London Mayor Boris Johnson
floated the idea of capping the number of nontaxi car services in
the city, arguing they are clogging the roads and pushing aside
traditional black cabs.
A cap in New York could have curbed Uber's appeal to potential
investors. The company, already the most highly-capitalized
venture-backed startup, is in talks with investors to raise more
than $1.5 billion in additional capital, valuing it at more than
$50 billion.
In its fight against New York's proposed cap, the company
accused the mayor of doing the bidding of political donors in New
York's yellow-taxi industry. Mr. de Blasio, in turn, had accused
the company of "putting [its] profits over all other
considerations."
City officials suspect that for-hire vehicles, whose numbers
aren't currently capped, could be a prime suspect in increased
congestion in Manhattan's central business district.
They point to average speeds there that had declined to 8 miles
an hour in May, from 9.4 mph in 2010. Given that the number of cars
entering Manhattan has declined steadily in recent years, officials
suspect that for-hire vehicles could be cruising for fares and
slowing down traffic.
Uber said the temporary cap could have limited its growth to 200
new cars instead of the 10,000 new vehicles the company has
expected to add over the next year.
Meera Joshi, chairwoman of New York City's taxi commission, said
data indicates about 70% of Uber's pickups have been within
Manhattan's central business district. Meanwhile, Ms. Joshi said
the city has been adding about 1,200 net new for-hire vehicles a
month.
The mere discussion of a cap may have led to some unintended
consequences. Ms. Joshi said the taxi commission has seen a rush
for vehicle licenses before a potential cap. Uber's Mr. Mohrer said
the fight with City Hall yielded "great advertising for us."
Write to Andrew Tangel at Andrew.Tangel@wsj.com and Douglas
MacMillan at douglas.macmillan@wsj.com
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