Catalysed by innovation in technology, the mobility business model in Latin America (LATAM) is likely to witness paradigm shift by 2025. It is expected to transform from traditional mobility business structure to technology based modern mobility business model.
The rapid growth in new mobility business models in LATAM is attributed to factors such as governments’ regulations, gradual penetration of internet and smart phones and massive investment in infrastructure. Due to this the market of taxi and eHailing, bike sharing, integrated mobility, etc. are prospering in small time frame and is expected to boom further.
Governments’ regulations: To promote new mobility business model, the governments of Brazil, Argentina, Mexico and Chile are gradually legalising ride hailing. Due to this the share of ride hailing vehicles is expected to increase to 45% by 2025. Moreover, governments are also enacting regulations that will be encouraging technology based mobility business model. It is likely to optimise mobility matrix in cities.
The government’s affirmative move has already attracted technology based mobility market players like Uber, Easy Taxi, Cabify, etc. in LATAM. On the other hand, it is also unfolding business opportunities at local level and Brazil based 99Taxis is one of the examples.
Penetration of app: By 2025, over 900 million people will be using smart phones in LATAM and more than 450 million people will have internet access through mobile phones. The anticipated scenario is encouraging modern mobility players to develop app for seamless customer journey experience. For the development of app and other operational activities of organization, modern mobility market players in LATAM are receiving huge investment.
- Recently, 99Taxis received US $100 million investment from Didi Chuxing and Riverwood and another investment of same amount from Softbank.
- Companies like Uber and Cabify are also investing in the development of app and other areas of business operation and promotion.
Investment in infrastructure: Cities of LATAM are emerging as customers for modern mobility market players due to which the trend of eHailing, bike sharing, ride sharing, etc. are on rise and is expected to propel further. By 2025, there will be six mega cities and five emerging mega cities in the region. To address the growing need of mega cities, the government of concerned country is heavily investing in infrastructure development. The cities of LATAM will witness 4000km bike lanes by 2030 and more than 100 projects related to mobility are in different stages of development—under construction, proposed for construction, feasibility study, etc.
Although at nascent stage, modern mobility business models are expected to create ample business opportunities in LATAM in short and mid-term. New entrants are expected to enter the market of modern mobility and compete with key players like Uber, 99Taxis, etc. Of the different models of modern mobility, eHailing is likely to grow significantly as its market is fueled by the penetration of app. Probably due to this reason, the market of eHailing alone is expected to reach US $34 billion by 2025 in LATAM.
Subarna Poudel is a researcher with Frost & Sullivan. He can be reached at email@example.com
Sapan Agarwal drives content and marketing for Frost & Sullivan. Sapan is based out of Kuala Lumpur Malaysia and can be reached at firstname.lastname@example.org | +603 6204 5830