Uber Spends and Losses Big on International Expansion, Challenged by Regulations and Rivalry
Uber has reportedly spent a big amount of money to expand its ride-hailing service globally. The facts and numbers are revealed last month in a European regulatory official filing with the Dutch Chamber of Commerce.
The file shows that the company lost $237 million in 2014 alone on international expansion. That was much higher than the 2013 amount of $31.9 million. The filing excludes Uber's U.S. operations, and the company does not officially publish their financial figures. However, Reuters reported that leaked documents show that the company-wide loss of Uber's second quarter of 2014 was about $109 million.
As for now, Uber's service is available in more than 400 cities around the world. That number comes after years of devoting resources to rapidly expand globally, as at the start of 2014 the service was just available in fewer than 100 cities. Now the company has an international headquarters in Amsterdam.
Vanity Fair explained two main reasons Uber is losing money abroad. One of the reason is regulatory battles, especially in European countries. Local politicians often throw up roadblocks to protect transportation interests, as many local taxi drivers also felt threatened by the online service's existence. That often ended in clashes and protests, as what happened in Spain, Germany, France, and the UK, among other countries. For that reason, Uber has pulled out of some cities, including German cities of Frankfurt, Düsseldorf, and Hamburg.
Another reason for Uber's huge loss abroad is rivalry. In China, Uber was involved in a price war with the local's Didi Dache and Kuaidi Dache, which provides the similar ride-hailing service. They are reportedly raising a new billion-dollar round of funding as both the company lower their prices to attract consumers. Both the company is facing operating losses, with a bigger loss for Uber at $1 billion annually in China alone. Meanwhile, Didi Dache had operating losses of $305 million and Kuaidi Dache at $266 million.
According to MarketWatch, Uber's international losses is likely to grow even higher this year. Uber Chief Executive Travis Kalanick revealed that the company is spending heavily to compete with local rivals, especially China's Didi Kuaidi Joint Co., the parent of Didi Dache and Kuaidi Dache. China is a particularly important market to win because about 30 percent of Uber's total global trips were in China. However, despite the global losses, Kalanick also said that Uber is profitable in the U.S.
Uber is facing huge losses globally as they face obstacles in establishing their ride-hailing service in global markets. The losses have grown over the years and is expected to grow even higher as the company tries to battle local rivalry.