Mexico City Could Be First Globally to Limit Uber Cars

Mexico City could become the first city in the world to limit the number of Uber cars, according to draft regulation that the company said on Friday also threatens to wipe out its most popular service in the giant metropolis.

Aside from the fleet limit, the plan seen by Reuters aims to enforce a minimum car value of MXN 250,000 (roughly Rs. 10 lakhs) on Uber and companies like it, a big worry for the ride-hailing service that is coming under increasing pressure from regulators.

The San Francisco-based company said the minimum value would hit hard Uber X, its cheapest and most popular service used by 90 percent of drivers. The start-up cost to most drivers using the service was about MXN 150,000, Uber said.

"This would imply the end of Uber X," the company said in a statement. "This would dramatically increase the cost and decrease availability for Mexican riders."

A Mexico City government official working on the regulation confirmed the details of the plan, which was drafted on Thursday and is expected to be finished next week. The official noted that details of the draft are still being negotiated.

The draft does not specify the exact car limit. Regulation by Mexico City would be the first for Uber in Latin America.

All cars in Mexico City worth over MXN 250,000 are subject to an annual tax, meaning the proposed regulation carries a potential double-whammy for the services.

No city in the world has yet imposed a cap on the number of Uber cars in circulation, Uber's public policy chief Corey Owens said this week in an interview.

Ruben Alcantara, a taxi union leader, said he would demand that Uber's cars cost at least MXN 400,000 when he meets with the government to discuss the regulation on Monday.

Uber, which has been valued at over $40 billion, opened in Mexico City in 2013 and says it is one of its fastest-growing markets with 500,000 customers and over 10,000 drivers, some of whom share cars.

Its competitor Cabify, which says it has 300,000 users in the city, said a limit on its number of vehicles made "no sense" because many of its drivers worked part-time.

The planned regulation would also require Uber's drivers to have permits and to pay a percentage of its revenue to a city transport fund, as shown by an earlier draft.

A city official said on Tuesday the permits were expected to cost MXN 1,599 a year and the revenue levy would be 1.5 percent, a figure that Owens put at the "high end" of what the company pays in other major cities.

The figures could still change, officials say.

© Thomson Reuters 2015