Sharing Economy Tensions Lead to Torched Cars in Spain

Car2Go

Car2go, a car-sharing fleet in Madrid owned by Daimler AG, has suffered attacks on 70 of its cars over the last 18 months. Pictured is a Car2Go 4-door Mercedes Benz. Car2Go

Skift Take: These kinds of clashes will be almost inevitable until workers being displaced by new technologies get adequate retraining and employment opportunities to make a transition.

— Dennis Schaal

In a sign of the tensions stirred by Spain’s embrace of the so-called sharing economy, cars were set ablaze near Seville in May.

Nine drivers for the ride-hailing service Cabify had their vehicles torched at the start of May after pitching up in the Andalusian city to seek custom at its spring festival. Car2go, a car-sharing fleet in Madrid owned by Daimler AG, has suffered attacks on 70 of its cars over the last 18 months. And Spanish “taxistas” went on strike Tuesday in protest at competitors whom they say mimic their service without forking out for a cab license that in Madrid can cost as much as 130,000 euros ($145,496).

Spain with its still-high unemployment and reliance on mass tourism is proving fertile ground for companies such as Cabify, a home-grown rival to Uber Technologies Inc. The tensions being created by the new competitors in Spain are on display in other countries from the U.K. to France and Italy that have also seen protests.

“There’s no doubt it’s a source of tension,” said David Murillo, a lecturer on globalization and business ethics at ESADE business school in Barcelona. “Workers are concerned about their jobs becoming obsolete, national regulators get sidetracked and there are also tax loopholes.”

Temporarily Banned

Uber and Cabify, a service that counts Japan’s Rakuten Inc. and Telefonica SA’s pension fund among its backers, rely on clients using internet-based applications to hail a ride, budget a trip and pay. While Uber’s main and most popular service, UberPop, is temporarily banned by court order in Spain, it does have licensed-chauffeur services operating in the country, similar to those offered by Cabify.

“Current tensions are linked to the disproportionate increase of authorizations to chauffeur-driven vehicles,” Julio Sanz, president of CTAC, one of Spain’s largest taxi unions, said in an interview by phone. “They work as if they were a taxi even without a license to do so. That’s illegal, and for us it’s impossible to compete.”

Cab licenses can fetch high prices in the secondary market because some cities haven’t issued new ones for years, said Sanz. For instance, the last time the city of Madrid gave out the documents was in 1978. He says there are now more than 2,200 vehicles offering Uber and Cabify service in Madrid, compared with fewer than 600 in 2012. That number compares with about 15,700 licensed cabs now plying their trade in the Madrid metropolitan region.

Smashed Up

It’s not only ride-hailing services that have faced protests. Car2go, a car-sharing unit of Daimler AG that allows users to pick up cars and drop them off anywhere in Madrid, have been targeted for attack. In the worst incident in December 2015, 60 cars were smashed up.

“Tension is increasing in Spain because of the lack of legislative clarity when it comes to identifying services such as Uber or Cabify,” said Orazio Corva, manager in Madrid for the company, in a phone interview. “It’s time to change the law that regulates them.”

Spain’s public works ministry said it would keep working to ensure an “ordered equilibrium” between the taxi industry and services such as Cabify. In a statement on Tuesday’s taxi-drivers’ strike, Cabify said it wasn’t seeking to compete with them.

“The mission of the company since its foundation in Madrid in 2011 has been to substitute individual vehicles in cities to do away with urban traffic and contamination,” it said. “If this aim is achieved it would increase the demand for public services like ours and those of taxi drivers.”

Striking taxi drivers striking in Madrid didn’t buy that argument.

“We’re worried about our jobs,” said Ignacio Pico, who has been working as a taxi driver in the Valencia region for the past 13 years as he took part in a protest Tuesday outside the Spanish parliament in Madrid. “They’re cannibalizing our industry.”

–With assistance from Esteban Duarte

©2017 Bloomberg L.P.

This article was written by Thomas Gualtieri, Rodrigo Orihuela and Maria Tadeo from Bloomberg and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

Ryan Wolkov

PRC Time Shares

Author: Ryan Wolkov

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