Cabify, the Spanish ride-hailing service, announced on Wednesday that it will cease its operations in Mexico in October. The company, which has been operating in Mexico for over a decade, stated that the decision is part of its strategy to focus on profitability and sustainable growth.
In a press release, Cabify attributed the move to its “strong commitment to the pursuit of profitability and growth,” noting that despite its efforts to establish a foothold in the Mexican market, the results had fallen short of expectations.
Struggles in the Mexican Market
Cabify’s business model, which is centered around creating a new Ibero-American mobility ecosystem, has not resonated as expected in Mexico, the company explained. “No future opportunities have been identified in this market,” the company added, signaling the end of an era for the ride-hailing app in one of Latin America’s largest economies.
Founded in Madrid in 2011, Cabify entered Mexico as part of its broader expansion strategy across Latin America and Spain, seeking to challenge Uber and other local competitors. However, the fierce competition in the region and regulatory hurdles seem to have contributed to the company’s decision to exit the market.
Impact on Users and Drivers
The departure of Cabify from Mexico will leave a void for its loyal users and drivers who have relied on the service for years. With operations ending in October, thousands of drivers will need to look for alternative platforms or new sources of income. The company has yet to clarify details regarding the final days of service or what will happen with users’ accounts and data after operations cease.
Cabify’s Broader Strategy
Cabify’s decision to pull out of Mexico aligns with the company’s recent efforts to streamline its business operations and focus on markets where it sees a clearer path to profitability. This move follows a similar decision in 2019 when the company ceased its operations in Brazil, citing challenges in maintaining a competitive edge against larger rivals in the region.
In its official statement, Cabify emphasized its intention to prioritize countries where the company’s model has shown more promising results. This suggests that the company will continue to focus on its strongholds, such as Spain and other Latin American countries, where it still operates successfully.
The Future of Ride-Hailing in Mexico
The exit of Cabify from the Mexican market is a significant shift in the landscape of ride-hailing services in the country. Uber, Didi, and local competitors like Beat will likely benefit from the exit, capturing a larger share of the market.
However, the competition among ride-hailing apps remains fierce, and companies must continuously innovate to meet the unique challenges of operating in Mexico. Factors such as local regulations, safety concerns, and economic challenges have long affected the ride-hailing industry in Mexico, and Cabify’s exit underscores the difficulty of thriving in this market.
