Uber Drivers Thin Out Across Brazil as Fuel Costs Cut Margins
(Bloomberg) -- Brazilians have one more problem these days to add to their pandemic woes: it’s getting increasingly harder to catch an Uber.
Gasoline prices, which have soared nearly 40% from a year ago to more than 7 reais per liter in some cities (roughly equivalent to $4.85 a gallon), are compounding drivers’ bills and causing many to give up on the job in Uber Technologies Inc’s largest market outside the U.S.
Costlier fuel accounts for the largest portion of Brazil’s inflation, now running at over 10% a year for the first time since 2016.
After five years chauffeuring app users around Rio de Janeiro, Luciana Carvalho, 51, went back to working as a tour guide in January when she realized that fuel prices were constantly climbing while her fares remained steady. “The numbers don’t add up when you spend 10, 12 hours in the streets and earn less than you did a year ago,” she said.
Many motorists are staying off the roads until costs come down. Others are making more permanent moves: Selling their cars or returning rental vehicles to seek other sources of income.
In Sao Paulo, Latin America’s largest city and one of the busiest in the world for Uber, 25% of drivers for the platform and local competitor 99, owned by China’s Didi Global Inc, have quit since the start of the pandemic, according to the city’s Association of App Drivers, or Amasp.
Uber issues are only one of the many problems caused by climbing fuel prices in Latin America. In Brazil, President Jair Bolsonaro has faced the constant threat of a strike by truckers who are unhappy about rising diesel costs, as well as a drop in popularity as cooking gas became more expensive. In Mexico, President Andres Manuel Lopez Obrador recently imposed caps on cooking gas prices, which have pushed inflation to double the central bank’s target.
It’s also a global problem. As the pandemic recedes and people return to work, energy prices are rising everywhere, with suppliers struggling to keep up with demand. Gas stations have gone dry across the U.K., while China is gobbling up available fuels ahead of what’s likely to be a frigid winter.
Further complicating matters in Brazil, many motorists working for Uber don’t own their vehicles, and rental companies have hiked rates due in part to shortages of cars. Teros, a consultancy in Sao Paulo, estimates that rental agencies have increased prices over 20% this year.
Those who remain behind the wheel are opting to work for more expensive services like “Uber Black” or are often refusing lower-cost rides.
“I’ve been in the red for the last three months,” said Joyce Travassos, 56, a driver in Rio de Janeiro. “I need to replace four tires and don’t have the means to -- you have to really consider where you go” on your rides, she said.
“You’ve got to be strategic,” said Sao Paulo driver Jeter Magno Cruz dos Santos. “A driver who isn’t being strategic won’t last.”
Read More: Surging Brazil Fuel Prices Put Spotlight on Petrobras Policies
Uber and 99 boosted the percentage of the sales drivers take home in September, but that did little to help them cope with rising costs.
“The adjustments didn’t bring any relief,” said Eduardo Lima, president of Amasp. “If we don’t get better rates or a break in fuel prices even more motorists will abandon” platforms.
Uber said in a statement that Brazil is facing a “high demand scenario” as cities reopen, and that surge pricing automatically kicks in when trips outnumber drivers. “For drivers, it’s an incentive to serve busier areas and helps rebalance the market now,” said Andre Monteiro, an Uber spokesperson.
That may do little to help Brazilians desperate for a ride.
After an overnight journey last month from Belo Horizonte to Sao Paulo, Eunice Ferreira de Souza was left stranded at a bus station at dawn. Eight app drivers accepted and then canceled on the 35 year-old hair stylist before she managed to get a ride home.
“Nowadays whenever a driver accepts, I immediately send a message promising a tip,” she said.
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