Major Industry Changes Forecast by 2027
With the emergence of ride-hailing and ridesharing services, the Latin American transportation sector is undergoing significant transformation. Where before transportation was restricted to either taxis, public transport, or private vehicle ownership, this new fourth option goes beyond traditional car rentals, providing enhanced convenience and affordability.
Made possible by the sudden ubiquity of the internet and smartphone usage, service availability still differs significantly between different regions and even within individual countries in Latin America.
Our comprehensive analysis here at Advantage LATAM Insights explored key components of the Latin American Ride-Hailing market, from industry players to market consolidation.
Six Key Ridesharing Trends Latin America
These are the key takeaways from ongoing trends and growth within the sector.
1. Now rivalling traditional taxi services (especially in regions with limited taxi options), technologies like smartphone apps, GPS technology, and efficient driver-passenger matching have boosted the ride-hailing markets to $15.1 billion in 2023, with expected growth to $16.4 billion by 2027. South American nations comprise the majority of market profits, with a significant contribution by Mexico in Central America.
2. Increased urbanization, smartphone adoption, and evolving transportation needs are driving the sudden growth in numbers. By 2027, user penetration throughout Latin America is expected to soar to 28.7%. Such rapid expansion presents numerous regulatory challenges, competition concerns, and traffic issues.
3. Ridesharing and ride-hailing could solve Latin America's congestion issues. Currently, 30% of traffic congestion in big cities is caused by drivers constantly looking for parking places, resulting in 66% longer commute times in Mexico City. With 73% of Latin American young people owning a smartphone, ride-hailing allows for a smaller number of cars to cater to a greater number of people, improving overall transportation efficiency.
4. Major players like DiDi Chuxing, Uber, Cabify, and 99 are at the forefront of the industry's evolution. However, market growth allows for increased competition. Local startups cater to smaller markets, providing greater regional knowledge, trust, and geographic coverage compared to the global giants. Changing consumer preferences, marketing dynamics, and demand for personalized services present an opportunity for local startups to grow rapidly.
5. Local startups are only one emerging opportunity for market growth. Significant diversification is occurring, with peer-to-peer (P2P) car sharing, business-to-consumer (B2C) ridesharing, and business-to-business (B2B) ridesharing services increasingly popular. Getaround, for example, is a P2P car-sharing service allowing car owners to lend vehicles for cost-effective rides. Meanwhile, industry giants like Uber and Lyft cater primarily to the B2C market and Cabify services B2B needs. As our report finds, big players will need to customize strategies to local cultures and needs, particularly in smaller towns, if they wish to compete with the growing regional players.
6. Looking forward: by 2030, we expect these trends to significantly reshape the transportation sector. Expect new laws and regulations to govern the market; greater penetration of smartphones will allow for the everyday use of ridesharing services; as a result, these services could contribute to reduced traffic congestion, filling the gap of inadequate public transport systems.