How to bring Ride-Hailing to Germany? Interview with the General Manager of mytaxi Germany & Austria
Ride-hailing is still in its infancy in Germany. This, in particular, is due to high regulatory requirements which make it impossible for leading global companies such as UBER to gain a prominent foothold in the German market with their business model of connecting passengers with private drivers.
mytaxi is the leading provider of a ride-hailing solution in Germany. The taxi-app was the first to connect passengers directly to licensed taxi drivers, thereby establishing a digital solution for matching drivers and passengers within the law. At the end of 2017, mytaxi took the next evolutionary step by launching its taxi-sharing offering called “mytaximatch”. It is currently operating in Berlin and Hamburg and was recently launched for trips from Munich Airport to the city center in the Bavarian capital in cooperation with Lufthansa. As of today, mytaxi has more than 10 million passengers, 100,000 registered drivers and calls itself Europe’s leading taxi app.
We asked Alexander Mönch, General Manager mytaxi Germany & Austria, why Germany is so reluctant to making progress on the subject of ride-hailing and what role taxis can play in a future mobility system within German cities.
Q: Even today, ride-hailing still has yet to be fully embraced in Germany. When do you think it will finally experience a tipping point? And why has it made so much more progress, say, in London than in Berlin?
Londoners are very tech-savvy and like to test out technical innovations at an early stage. They also earn high salaries and time is a scarce commodity there. The ownership of cars is continuously decreasing, which is no doubt due to the severe traffic congestion, the lack of parking, and the so-called “congestion charge” to be paid when driving into the city. Germany, on the other hand, is still a “car country.”
In fact, car ownership in Germany peaked this year. Increasingly, we need alternative offerings that gradually create their own demand. Phasing out individual car ownership will only be possible in urban settings on a broad scale if driven by the right combination of alternatives and potential political measures.
Q: Regulatory ambiguities still exist worldwide, with some regions even experiencing intense feuds between (local) governments and the tech economy. This is also the case in Germany. What do you think contemporary passenger transport regulations should look like — and can they accommodate all the interests represented in 2018?
The German Passenger Transport Act (PBefG) regulates the nationwide use of taxis and rental cars, including those with a chauffeur. This has worked well for decades. The taxi is considered as part of the local public transport and complements the bus and train services. Falling within the framework of public services, the taxi industry enjoys a reduced tax rate and, in return, is subject to pricing, transport, and operating obligations. As a result, citizens can always rely on stable taxi availability and prices, even in the outer areas of the city.
The rental car, on the other hand, is only available via preorder and with a known destination — a service for business travelers or upmarket shuttles for events. Car rental companies set their own prices and its chauffeurs are not required to prove their knowledge of the local area, unlike taxi drivers. In the age of apps and mobility platforms, it is very easy to spontaneously hire a rental car. Rental cars are therefore able to directly compete with the taxi industry while operating under completely different conditions.
Nevertheless, taxis are allowed to offer the option of ride-sharing. This is prohibited with rental cars, although it may be permitted by the authorities during a test phase on a restricted basis. The time is therefore long overdue to revise the PBefG with an eye towards establishing a “level playing field,” as affirmed by the Grand Coalition agreement. Our view is that it no longer makes sense to consider taxis and rental cars as two different modes of transport. The line between the two will further blur over the next few years.
Q: For some players in your industry, trips to the airport account for well over 50% of the order volume. How important is the airport as a transport hub for mytaxi?
In most urban centers, the trip to the airport is the most profitable route. Munich is certainly a special case. The average fare there is 75 euros which, of course, also applies to mytaxi as an intermediary. We measure our success, among other things, by the gross revenue that is generated by our affiliated drivers.
Q: Word has gotten out, at least for the most part, that you can hire conventional taxis via smartphone. With the digitally supported sharing of taxi rides, you are now taking the next evolutionary step. Meanwhile, bicycles and e-scooters are being advertised as “the new black” of the mobility mix. Air taxis, so-called VTOLs, are also appearing more and more frequently in studies. How will mytaxi respond to these extensions of the mobility chain?
We take a positive view of all developments aimed at reducing private transport in metropolitan areas. Only an attractive range of alternatives will persuade citizens to stop driving their own cars into the city. The political desire to reduce individual transport plus the projected population growth will also greatly increase the demand for new mobility services. There is enough business to go around for new mobility alternatives. People’s demands are constantly changing. In the morning, I take a taxi to get to my appointment while in the evening, I take a bike and the tram to visit friends. On weekends, I may use car sharing to do my grocery shopping. Mobility needs of students differ from those of business travelers. Taxi drivers can also benefit from these changes, as they are able to take advantage of the growth and secure their fair share of the pie through great quality and service. In the future, passengers will no longer use five apps, but only one multimodal mobility platform that brings together all offers. And, yes, in a few years there will be VTOLs as well as autonomous vehicles.
Q: The automotive group Daimler became involved in mytaxi as a strategic investor at an early stage and took over the company completely in 2014. How have you specifically benefitted from working together since then? And how have you managed to hold on to mytaxi’s startup DNA?
As an employee, you feel better off with a strategic investor on your side than with a pure financial investor. mytaxi’s business fits perfectly into the portfolio of a mobility service provider such as Daimler. The strength of a company with a clear vision of mobility is an unbeatable foundation. mytaxi has not had to give up its DNA. We have a number of employees who have been with us for 5–8 years and have gone through each and every phase of the startup. Others who looked for employment elsewhere and came back after a few years. Isn’t that a form of praise?
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