Chinese-backed rival takes on Uber in London

Can Taxify disrupt Uber's London stronghold?
Can Taxify disrupt Uber's London stronghold?

Uber is facing competition from a Chinese-backed upstart promising cheaper rides in one of the world's busiest markets.

Taxify launched its ride-hailing app in London on Tuesday, offering half price fares and no surge pricing until the end of the month.

Once the initial discounts end, Taxify still aims to be 10% cheaper than Uber, CEO Markus Villig told CNNMoney.

"I think we mainly have a very strong second mover advantage," Villig said. "We don't need to do the hard work of actually establishing this market. We can rather come in, be more efficient, more lean and take a smaller cut for ourselves, and therefore undercut the existing incumbents."

Its launch in the British capital comes as Uber is struggling to recover from a series of damaging scandals that resulted in its former CEO being forced out by investors.

The new arrival appeared to be drawing plenty of interest: Taxify was top of the trending list in Apple's App Store in the U.K. on Tuesday morning.

Related: As Uber stumbles, rivals mobilize abroad

But even though Taxify said it had "thousands of drivers signed up" ahead of the launch, its service appeared to be lagging Uber in some central London locations early Tuesday, with longer waits for rides.

"In this early stage, this is normal and we are expecting more drivers to come online within the following hours," a Taxify spokeswoman said. "In the longer term, we are aiming to offer our customers the shortest waiting times."

Wait times were already competitive in some places, such as near the Royal Opera House, she added.

taxify didi chuxing

Taxify is entering a crammed marketplace. Other apps such as Gett and MyTaxi already jostle with more traditional cab firms for business in London.

Taxify started operations in Estonia in 2013. It says it takes less commission from drivers than Uber and other rivals, enabling it to charge customers lower fares.

Its London launch coincides with the official first day on the job for Uber's new CEO, Dara Khosrowshahi, who was picked to help the world's most valuable startup bounce back from months of crisis.

Related: New Uber CEO tells staff company 'has to change'

Uber: A history of controversies
Uber: A history of controversies

Taxify says it already has more than 2.5 million customers across 19 countries in Europe, Central America and Africa. It's planning to launch in Paris before the end of 2017.

"We see that in the long term, actually taking a smaller cut and having happier drivers will really lead to a sustainable business," Villig said, adding that the firm had been profitable over the past 12 months.

And he has powerful friends. Didi Chuxing, the Chinese ride-hailing service that beat Uber out of the world's most populous nation, said last month it was investing in Taxify and would help it grow.

The partnership is just one of several Didi has established with Uber rivals around the world, including in the U.S., India and Southeast Asia.

Didi, whose backers include Apple (AAPL) and major Chinese tech firms, is pressing ahead with the tie-ups despite its financial links to Uber.

Related: China's Uber worth $50 billion after raising more cash

Didi's deal to buy Uber's China business resulted in the U.S. company receiving a roughly 18% stake in the Chinese firm. And Didi ended up with a stake in Uber.

A Didi spokeswoman played down the potential conflicts of the company's web of links to Uber and its rivals around the world, saying there was "ample room" for multiple operators in the rapidly developing market.

"Eventually, drivers and riders, and cities looking for solutions to their congestion and efficiency problems, will benefit from robust investments into the industry from different players," she said.

Uber said millions of Londoners were using its app and waiting less than three minutes on average for a ride.

"Competition is a good thing as it raises service levels across the board," an Uber spokesperson said.

-- Samuel Burke and Mark Thompson contributed to this report.

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