VTCs

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.” (Unsplash) 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. (Unsplash) 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. … Read more