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Cities respond to price pressure in the rental car market
More and more cities in Germany are introducing minimum fares for hire-car services. Following current announcements from Cologne and Dortmund, the municipalities are responding to ongoing price undercutting competition in the passenger transport market. The aim is to curb economically unviable offers and secure stable competitive conditions.
Reaction to app-based platforms
According to the Federal Association of Taxi and Hire Cars, the measures are aimed in particular at dumping prices that are associated with app-based ride-hailing platforms. Municipalities wanted to prevent hire-car trips from permanently being offered below economically viable prices and thereby cause market distortions.
The introduction of minimum passenger transport charges should help prevent ruinous competition at the expense of drivers as well as at the expense of a functioning public transport system. At the same time, it strengthens municipalities' ability to steer the commercial passenger transport sector.
Call for nationwide expansion
The Federal Association of Taxi and Rental Cars welcomes the development explicitly. The association says it has been advocating for minimum prices as a regulatory policy instrument for years. These are suitable to create fair playing conditions between taxi and rental-car traffic and to align competition more with quality, reliability, and working conditions.
„We see very clearly: More and more cities recognize that true competition needs clear and reliable rules. Minimum transport fares are an effective instrument against dumping prices and protect drivers from ruinous business models,“ explains Michael Oppermann, Managing Director of the Federal Association of Taxi and Rental Cars. „Whoever wants to secure mobility in the long term must not allow individual providers to destroy structures that have grown up under artificially subsidized low prices.“
Against this background, the association calls for the introduction of minimum passenger transport charges in all 80 German large cities. Large cities are municipalities with at least 100,000 inhabitants. In perspective, corresponding regulations could become necessary in many places to stabilize the market on a lasting basis.
Municipal Responsibility
From the association's perspective, cities that introduce minimum prices take on responsibility for social standards, road safety, and reliable mobility options. The Federal Association of Taxi and Rental Cars announced that it would continue to advocate at the federal, state, and municipal levels for appropriate competition rules in the passenger transport market. (Source: Federal Association of Taxi and Rental Cars)
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