the shadow business that moves VTCs in Spain

Before the boom of Uber and Cabify, the acronym VTC They were an enigma. Now they have become almost a popular nickname. In Madrid, it is enough to see the sticker of the red flag with stars of the autonomous community on a car to think “it is a VTC”. The urban center is littered with this type of vehicles.

But the VTCs, which respond to “transport vehicles with driver“, existed for decades. They were cars intended for luxury transportation, the typical car that was rented with a driver. These actors are still in the market and operate in the tourism sector or as transportation for companies, but they are a minority.

Apps changed everything. Cabify, Uber and Bolt have taken VTCs out of their niche to bring them to a mass audience. Thanks to the immediacy they allow, these cars with drivers have become so close to the taxi figure that they now constitute direct competition. But unlike taxi drivers, who tend to be small self-employed, a large part of the VTCs are in the hands of large companies. And they do not correspond exactly to the apps.

“There are three large groups, which are Moove Cars, Auro and Vecttor,” says José María Cazallas, Secretary of Organization of the Free Transport Union, which represents around 80% of the workers in the VTC sector and also has significant representation in the taxi sector. “These three groups come together more or less around the 60% of licenses VTC in Madrid.” They are different entities from the applications that the user knows, although Cabify and Uber have participation in these companies.

VTCs vs taxis

The rise of VTCs in Spain cannot be understood without taxis and the framework in which they traditionally operated. “The model of one license for each taxi driver was followed. It was a very interventionist model. I’m talking about the beginning of the 20th century until the end of the 90s, in which they tried to distribute the business,” explains Alejandro Román, professor in the Department of Law at the University of Seville and author of the book The legal regime for the transport of passengers on demand in tourist vehicles (Taxis and VTC).

Román affirms that for a long time the granting of licenses was contaminated by the clientelism. In times where well-paid work was scarce and there were many arduous jobs, a taxi license was a safe option. “These people had a guaranteed job, with a guaranteed profitability, because they had no competition,” says the professor from the University of Seville. “The number of operators in the market was calculated so that all license holders could live reasonably well.”

In a limited market, which barely issued new licenses, these became a scarce commodity. Their buying and selling occurred at astronomical prices. But the panorama changed completely with the arrival of Cabify and Uber. License prices fellalthough later it has come back. Now, in a look on Wallapop you can see taxi licenses for sale for between 180,000 and 210,000 euros for Madrid. In Barcelona they have a similar price, slightly less than 200,000, although some advertisements exceed them. It depends on the schedule for which the license is scheduled or if the car is included.

The history of VTC licenses is different: their price has not stopped growing and they have reached almost the same level. Again taking Wallapop as a quick barometer, you can see that a VTC license in Madrid is available for around 180,000 euros. In Barcelona, ​​where the sector faces regulatory uncertainty, the price is much lower, around 75,000 euros.

But the most important change that Cabify, Uber and Bolt have brought is technological mediation. “In the VTC the model is different. What happens is that over time it has become increasingly closer to the taxi model,” says Román. The VTCs could not take clients on the street or at taxi stops, while the contracting of their services had to be done in advance. This is established by law to guarantee a market reserve for taxis, which in return are obliged to perform certain public functions, such as not rejecting clients or providing transportation support in situations of health emergencies.

“With the arrival of applications, this required pre-contracting is diluted. The technology itself makes it immediate. Because you open the application, you pre-contract the VTC, but you can start using it five minutes later,” concludes Román. In practice, the two models provide the same type of transportation service, although they have different regulations.

A sector of large companies

The similarity of the service they provide, however, differs in their back room. The exploitation of VTCs is dominated by large companies with hundreds or thousands of licenses in their name. These companies are intertwined with some of the platforms. “Cabify is the owner of Vecttor. And Moove Cars and the Auro Group are owned by Uber,” says Cazallas, from the Free Transport Union.

“While the number of licenses that each taxi driver can have is limited, in the case of VTCs there is no limitation on the number of licenses per owner. That is why a market of large companies that request many licenses has emerged,” emphasizes Román. And the number continues to increase. Cabify has deployed in Madrid 800 new licensespart of a package of 8,500 requested in 2018 taking advantage of a legal loophole.

The Estonian platform Bolt, the only one of the three that does not have its own fleet and claims to work with freelancers and small businesses, criticized the granting of these licenses as a form of market concentration. According to their calculations, the addition of 8,500 licenses to the Cabify/Vecttor fleet would put 70% of the active VTCs in the autonomous community under the control of a single company.

One of the main figures behind Vecttor has been the Sevillian businessman Rosauro Varofounder of PepePhone. He built a VTC company that accumulated 2,000 licenses for later sell it to Cabifybecoming part of its shareholders. Another proper name is Francisco Riberas, belonging to the family that runs the Gestamp group, a multinational dedicated to manufacturing automotive parts.

The name of Gestamp and the Riberas family is repeated in another of the large companies that monopolize VTC licenses. This is Moove Cars, where another member of the family, Jon Riberas, is present through its investment vehicle. In it we also find Uber, which acquired 30% of the capital, after providing the necessary financing for Moove Cars to save the fall of the pandemic.

Later, Uber also entered the capital of the third large group of VTC licenses, Auro. He did so with an identical stake to the one he maintains in Moove Cars, 30%and after a ruling by the Constitutional Court that allowed breaking the agreement it had with Cabify to use its platform exclusively.

Between these three companies they own a significant part of the VTC licenses in Spain, although they are joined by others such as Cibeles Comfort Cars or Alsa (the bus services company, yes, it also has cars that work with applications). According to data from the Ministry of Transport and Sustainable Mobility24,543 VTC licenses operate in the country as of April 1. The number of taxis amounts to 61,784.

The figures for active VTC licenses have multiplied. This trend received a boost after the Court of Justice of the EU overthrow the Supreme Court rulingwhich established a ratio of 1 VTC for every 30 taxis. On the other hand, the number of taxis has decreased. The year 2022 began with 64,662 taxis compared to 17,937 VTCs, according to DGT statistics.

Although the big cities are the ones with the most volume, today the landscape is different in Madrid and Barcelona. The capital has 9,570 VTCs and 16,026 taxis, while in Barcelona there are 3,952 VTC licenses and 10,910 taxis. However, the Parliament processes a new regulation that would restrict the number of urban licenses in Barcelona. An uncertainty that restrains the push of large companies.

The profile of VTC drivers

VTC companies usually establish two shifts for each license, one that starts early in the morning and another to cover the afternoon. Sometimes there is a third shift to cover days off and holidays. Cazallas, from the Free Transport Union, maintains that drivers tend to be people with accessibility problems in the labor market.

“There are many immigrants who see here an opportunity to start working in Spain. And there is also an important part who are over 55 or 60 years old, some come from ERES of large companies,” he highlights.

The Cazallas organization has negotiated agreements for the VTC sector in several autonomous communities. Some companies, due to their size, even have their own agreement. As a reference, the agreement reached for Madrid establishes a working day of about 39 hours per week and the average salary is usually around 1,400-1,500 euros net per month in 12 payments, according to Cazallas.

“The main difference with the taxi is the size of the companies. Those who work for a self-employed person, as happens in the taxi, where the majority are self-employed with one employee or companies that have three licenses or four with eight or ten workers at most, are not the same as the conditions of Auro, for example, which has almost five thousand workers,” says the organization secretary.

Perhaps the big difference in salary is in the variable part. In the taxi sector there are more possibilities of reaching particular agreements to distribute billing, while VTC companies leave less room for this concept.

Although beyond the rivalry between taxis and VTCs, their working conditions and the number of licenses that can be activated, there is a concern that overwhelms both sectors. “In the future we are going to have a very important challenge, which we will see how it is regulated,” warns Cazallas. “It is the issue of the autonomous vehicle. In Madrid they are already going to start testing autonomous vehicles in 2026. They are pilot tests and the idea, from what we are seeing, is that in 3 or 4 years autonomous vehicles will already circulate in the Community of Madrid.” It will be a technology that will bring uncertainty to employment, but also to other areas such as traffic. AND It’s around the next bend.

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