Ride-sharing brand, Uber, appears resigned to continue to lose money in its home market, the United States. The losses have less to do with the string of PR crises that have plagued the company over the past few years, and more to do with stiff completion from major rival, Lyft.
Uber CEO Dara Khosrowshahi, as reported by Reuters, said: “The US is very, very competitive right now between us and Lyft, so I don’t see the US as being a particularly profitable market for the next six months…”
Following up on that surprise bluntness, a company spokesman said Uber expects to “break even” in some cities, but remain unprofitable overall. This “overall” lack of profitability is being driven by poor showings both at home and in emerging Asian markets, where Uber continues to struggle. Add to that ongoing legal and operational disputes with certain key cities, like London, and it presents multiple problems for Uber.
Uber fans and investors hope Khosrowshahi is up to the task of navigating Uber through the rough waters initially created by the former CEO, Travis Kalanick, who aggravated both customers and employees with what some described as his “abrasive” attitude and leadership.
While Uber is built on a model that allows for massive losses while establishing business in a new market, people are unsure how well the company can maintain those losses in markets where they should be well-established. The concern is, why isn’t Uber still gaining ground in the United States?
Through its trailblazing clashes with local, state and federal regulators, Uber’s brand recognition soared. It was the classic American can-do story, a scrappy company Fighting the Man in order to deliver something its customers wanted. But that mythos proved untenable. After multiple negative headlines and lengthy battles, Uber was left financially strapped and dealing with market fatigue. Customers were less inclined to automatically prefer their brand over the competition.
That left a window open for Lyft, which had often been content to let Uber fight the legal battles, which remains a solid number two in the ride-share market. Now, though, sensing an opening, Lyft pushed hard, gaining ground as Uber’s leadership transitioned and the company slogged through one PR disaster after another.
Now, the playing field is growing more level. If Uber wants to get its operations in the States back on a profit-making basis, the company has to make some shifts in how it attracts and retains customers. The sooner, the better.
Ronn Torossian is the Founder and CEO of the New York based public relations firm 5WPR: one of the 20 largest PR Firms in the United States