Uber Thrives: Why?

In spite of the fact that Uber is the most banned company in the world, it thrives for one simple reason: People like it, especially business travelers and millennials, even if politicians don't.

For the first time ever, Uber Tops Taxi Use for Business Travelers.

In the three months ended in June, Uber overtook taxis as the most expensed form of ground transportation, according to expense management system provider Certify. Uber accounted for 55 percent of ground transportation receipts compared with taxis at 43 percent.

"Established travel providers will need to adapt quickly or face further market share erosion to the sharing economy," Certify CEO Robert Neveu said in a statement.

Certify based its finding on the 28 million trip receipts its North American clients submit each year. It does not include receipts from business travelers whose companies use other services to track expenses.

In a few cities, Uber beat out taxis by a wide margin for business travelers. In its home town of San Francisco, 79 percent of rides expensed through Certify during the second quarter were for Uber. In Dallas, 60 percent were for Uber and 54 percent in Los Angeles. Certify noted that it saw rental car transactions drop at the same time.

Uber Banned

Here is a link to a Google search for "Uber Banned". Every few weeks or so, another city or country bans Uber.

The Regulation Rap

The big knock on Uber is that its drivers are unregulated. If customers don't care, what business is it of city officials to care?

Price of Taxi Permits

The real reason cities care is one cities never say: Cities like selling taxi permits for exorbitant prices.

Please check out the going price for a Chicago Taxi Medallion.



There's a medallion on sale right now for the bargain basement price of $249,000.

That's the effective start-up cost for an independent person wanting to get into the taxi business, in a government-sanctioned way.

How much will that medallion be worth five years from now? Ten?

Bad Driver Rap

One can find dozens of stories about bad Uber drivers. Are there no cab complaints, or is it that cab complaints are simply not newsworthy?

Regardless, bad Uber drivers will vanish within five years or so for the same reason taxi driver will vanish: Automation will be the death of all commercial drivers.

Drivers Not Wanted

The need for taxi driver, limo drivers, bus drivers, train drivers, and long-haul truck drivers will nearly vanish within 10 years. Five or six years would not surprise me at all.

Uber recently announced that it wanted to purchase 500,000 self-driving cars in 2020. So, Uber-cab is coming without a doubt.

As a result, there will be less need for cars, and ultimately no need for drivers.

Al Gore has a different idea: Gore wants to Spend $90 Trillion to Rid Cities of Cars.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com