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Uber Temporarily Cuts Prices on Taxi-Like Service in New York

July 8 (Bloomberg) –- Taxi cabs are part of the iconic New York landscape, but is Uber about to change that? The company says they've lowered UberX fares by 20%, making them cheaper than a cab. But is it true? Bloomberg sent two interns on a race around town to find out which is less expensive. Video by: Sadie Bass, Justin Beach. (Source: Bloomberg)

Uber Technologies Inc., the car-sharing service that lets people order transportation via a smartphone, is temporarily cutting fares on its taxi-like option to step up competition with New York City cab services.

The startup reduced fares by 20 percent in New York for its UberX service, making it cheaper than a city taxi, the company said today on its website. An UberX ride from New York’s Grand Central to the Financial District would cost $22 under the new fares, compared with $24 for a city taxi, Uber said. The lower prices will be in place for a limited time.

Uber, which last month raised $1.2 billion at a valuation of about $17 billion -- more than car-rental service Hertz Global Holdings Inc. or retailer Best Buy Co. -- has faced regulatory hurdles around safety concerns and protests by taxi drivers’ lobbies in the U.S. and abroad. Traditional cab drivers worldwide say they are bound by rules that don’t apply to Uber’s smartphone-based service, putting them at a disadvantage.

“New York is Uber’s biggest market, and we’re growing fast, but we always hear, ‘I like Uber, it’s convenient but a taxi is still the best deal,’” said Josh Mohrer, Uber’s general manager for New York. “It’s always been a goal of ours to be cheaper than taxis.”

Photographer: Andrew Harrer/Bloomberg

Uber Technologies Inc., which last month raised $1.2 billion at a valuation of about $17 billion, has faced regulatory hurdles around safety concerns and protests by taxi drivers’ lobbies in the U.S. and abroad. Close

Uber Technologies Inc., which last month raised $1.2 billion at a valuation of about... Read More

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Photographer: Andrew Harrer/Bloomberg

Uber Technologies Inc., which last month raised $1.2 billion at a valuation of about $17 billion, has faced regulatory hurdles around safety concerns and protests by taxi drivers’ lobbies in the U.S. and abroad.

Fare Experiment

The San Francisco-based startup is using the slower summer months to experiment with lower fares to compete with traditional yellow cabs, Mohrer said. While there have been price cuts on UberX services in other cities, this is the first in New York. If more people are using the service at the reduced fares, then pricing will stay at the new level, he said.

UberX is the lowest-priced service offered by the company, which provides a range of vehicles such as town cars and limousines. UberX’s service in New York isn’t a ride-sharing program like in other U.S. locations -- drivers in New York City have a taxi license and follow a more traditional commercial model.

Over the Fourth of July weekend, Uber also provided helicopter service to the Hamptons from New York city for $2,500 for five people, Mohrer said.

Unlike taxis’ fixed fares, Uber’s prices change depending on demand. When supply is high, Uber can cost half as much as a regular taxi or black car service, while when demand peaks Uber’s pricing can be twice as much.

Driver Impact

Uber will keep 20 percent commission for each ride, and drivers will make less per trip, though they should see more riders in a day, Mohrer said. In all other cities where Uber has initiated price cuts for UberX, trips per hour have increased, he said.

“With shared economy and new technologies offering riders more transportation options, we are committed to maintaining high standards for safety and consumer protection,” Meera Joshi, chair of New York City’s Taxi & Limousine Commission, said in a statement. “As long as services meet those standards, the consumer can choose which service best serves their needs, whether that’s based on price, vehicle type, base location, or something else entirely.”

While protests by taxi drivers who say their business is threatened by Uber have occurred all over Europe, New York has been a relatively friendly market. The company doesn’t anticipate any uprisings due to the UberX price cut, Mohrer said.

(An earlier version of this story was corrected in the 10th paragraph to show that the Taxi & Limousine Commission representative didn’t decline to identify himself.)

To contact the reporter on this story: Jing Cao in New York at hcao38@bloomberg.net

To contact the editors responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net Jillian Ward, Niamh Ring

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