How to expand your ride-hailing business into Latin America: A step-by-step guide

Ride-hailing apps like Uber and Cabify are becoming increasingly popular in the region, indicating a strong market for convenient and affordable transportation options. However, expanding into Latin America requires careful planning and strategic execution, given the varying local regulations and unique market dynamics.

In this article, we’ll guide you through the critical steps to launch a successful ride-hailing business in Latin America, focusing on effective strategies, market analysis, and technical considerations. Let’s look at how you can leverage the region's growth potential while avoiding common pitfalls.

Latin America's booming ride-hailing market: a land of opportunity

Latin America's ride-hailing services market is booming. The region is forecasted to reach a revenue of US$7.50 billion by 2025, with an annual growth rate of 3.33%. Additionally, user penetration is expected to reach 30.6% in 2025 and remain steady through 2029. 

This growth is fueled by several factors, including increased urbanization and smartphone adoption, which create a fertile ground for global mobility solutions. More and more people are looking for safe, convenient, and affordable ways to get around in the region, and mobile apps for taxi and cab services fit the bill.

How to successfully scale your taxi business to Latin America

Here’s a step-by-step guide to ensure your expansion is strategic:

Choose the country(ies) to enter

Before entering the Latin American market, strategically approach the decision of where to launch your ride-hailing business. Your choice of country or countries to start with can significantly impact your success.

Instead of a generic approach, investigate each country individually to evaluate whether its economic and social parameters align with your business model and plans. A detailed investigation will allow you to assess the market’s suitability and navigate local regulations efficiently.

Here’s what you need to consider when choosing the right country to launch your taxi service or other mobility solutions in Latin America:

1. Market analysis. Analyze the local taxi market to identify underserved areas, customer segments, and transport needs.

• What is the average wait time for a taxi service?
• What are common complaints about existing transportation options?
• Are public transport systems reliable?
• Are there any specific areas that would benefit from an improved ride-hailing service? 

Identify potential opportunities for your company to address unmet needs. Your market analysis should include the demographics, culture, habits, travel patterns, and income levels of the local population.

2. Competitive landscape. Begin with a competitive analysis of each potential market.

• What companies are already providing taxi services?
• How are they performing?
• What are their cab taxi service prices?
• Are there any untapped niches or areas where established players have a weak presence? 

For example, if most of the currently operating ride-hailing companies are focused on wealthier customers, perhaps you should focus on a different segment. Understand the competitive dynamics before making a move.

3. Local regulations. Many LATAM countries still lack clear regulations for the ride-hailing business.

Investigate the specific local regulations concerning taxi services, cab taxi services, and ride-hailing services. Licensing requirements, labor laws, operational constraints, and tax obligations can vary from one country to another, impacting your business plan. 

If you aim to operate an on-demand delivery software business, you need to research delivery laws as well. You also need to take into consideration how much time each legal process may take, since it can affect your overall launch timeline. Choosing a country with a simple, well-defined regulatory framework will make your market entry more efficient.

4. Smartphone adoption and infrastructure. Assess the penetration of smartphones and internet access in each country, as this directly impacts the viability of mobile-based on-demand services like apps for taxi and ride-hailing bookings.

It’s also important to investigate the availability of reliable mobile internet networks and digital infrastructure. High rates of smartphone penetration will be necessary for your business to thrive.

5. Affordability and convenience of existing options. Consider the convenience and affordability of traditional taxis and public transport.

• Do locals rely more on cash or cashless payment options?
• Are there cultural norms about tipping and negotiating with drivers? 

You should examine the prices and availability of competing transportation options to determine your pricing strategy and attract customers to your service. For example, if your target audience is used to receiving promotional offers, you must prepare effective strategies for client acquisition and retention.

By addressing all of the above, you’ll be able to choose the market with the highest opportunities for success.

Guarantee that your technology meets the necessary standards

Your technology needs to be robust and adaptable for the Latin American market. Make sure your apps work seamlessly and are localized for each target market.

Here are some must-haves:

• App localization. Mobile apps should use local languages and maps.
• Local payment gateways. You need to integrate local payment gateways to enable cashless payments through payment methods that local passengers use.
• Safety features. Your app must have features like an SOS button, tracking, and route sharing for passenger safety.
• Reliability. The app must be reliable and free from glitches, as system downtimes can disrupt operations and cause poor customer experience.

Onde provides all of these features out-of-the-box, making it easier for you to scale your business to Latin America and ensure compliance with local regulations. For example, Onde uses Google Maps, offers multiple cashless payment options, has an SOS button, and provides reliable and secure technology for your ride hailing application and other enterprise mobility solutions.

To help you visualize this, here’s a real-world example.

TaxiBit’s success with Onde

TaxiBit, a ride-hailing company in Central America, successfully expanded with the Onde platform. As the fastest-growing ride-hailing platform in the region, TaxiBit uses Onde’s white-label solutions to manage its fleet of 2,600+ vehicles, providing reliable transportation to thousands of passengers every day. This helped them go from 0 to 17,000 trips per month within one year while launching in two new countries in parallel. To learn more about TaxiBit’s success and how Onde can help you scale to Latin America, see this case study.

Build strategic partnerships

After choosing your target location and improving your technology, establishing local partnerships becomes crucial for a successful launch in a new market. These partnerships serve as bridges connecting your ride-hailing business to the local community.

These partners can help with:

• Navigating local laws. Get guidance about legal compliance and regulatory constraints
• Reaching new customers. Work with local influencers to promote your services and target specific audiences.
• Business expansion opportunities. Partner with established businesses in tourism, hospitality, or corporate transportation
• Increasing credibility. Collaborating with local figures makes your company more trustworthy to local clients.

Create a targeted marketing strategy

Your marketing campaigns should connect with the needs of local users. What appeals to customers in Europe or North America may not resonate with people in Latin America, as each region has its own unique culture and traditions. Here's what to keep in mind:

• Local culture. Tailor your ads, content, and brand messaging to local tastes and preferences.
• Channels. Identify the most popular social media channels, digital platforms, and traditional media in your target market to create well-performing marketing campaigns.
• Building trust. Your messaging should focus on safety, reliability, and affordability to resonate with Latin American users.

Here are two examples of how Uber localized their marketing strategy:

• Leveraging celebrity endorsements with a local touch. In Latin America, where trust and aspiration often play a significant role in consumer choices, endorsements from local celebrities can be highly effective. For example, the story of a famous Brazilian actress choosing an Uber Moto to get to the airport on time isn't just a random incident—it's a powerful illustration of the service's reliability and convenience. Instead of generic messaging, use real and relatable examples to demonstrate your cab taxi service's value proposition.
• Bridging the gap with the informal transport sector. In many parts of Latin America, informal transportation options like “mototaxis” have been a way of life for years. The success of ride-hailing apps like Uber and similar solutions in integrating these services shows how these companies have tapped into an existing need. Instead of trying to reinvent the wheel, use the knowledge and the existing market by capitalizing on the familiarity of local users with these services. Marketing should focus on showcasing the added convenience, safety, and formalized process of using a mobile app, which can reassure users while offering the benefits of a modern, efficient system. 

For instance, it may be more relevant to highlight how your app makes existing methods of transport better and more accessible instead of positioning them as old-fashioned or undesirable. Use the established market, improve it and offer a better service. In addition, make sure to promote your ride-hailing platform in such a way so the app seems like an improvement, rather than a competition with the established informal market.

If you're interested in effective marketing strategies for your local transportation business, explore Onde's marketing services.

TL;DR

Let’s summarize the crucial steps toward successful expansion into Latin America.

• Market research. Conduct thorough research to understand the market dynamics, customer preferences, and competitive landscape.
• Regulatory compliance. Ensure full compliance with local laws, regulations, and licensing requirements.
• Technology infrastructure. Implement a robust and scalable technology platform to support operations, bookings, and payments.
• Local partnerships. Build strong partnerships with local stakeholders, including local businesses, fleet operators, and government agencies.
• Marketing and promotion. Develop targeted localized marketing campaigns to increase brand awareness and attract customers.