Before the boom of Uber and Cabify, the acronym VTC was an enigma. Now, it has become almost a popular nickname. In Madrid, a glimpse of the red flag sticker adorned on a car instantly makes one think, “That’s a VTC.” The urban landscape is now brimming with these vehicles.
VTCs, standing for “transport vehicles with a driver,” have been around for decades, primarily serving luxury transportation needs—think of them as the type of cars you would rent with a driver. Although they still have a presence in the tourism sector and corporate transportation, they now operate in a much more competitive market, heavily influenced by ride-sharing apps.
The Rise of VTCs
Apps like Cabify, Uber, and Bolt have revolutionized VTCs, taking them out of their niche and introducing them to a mass audience. These vehicles now compete directly with traditional taxis, yet their ownership dynamics are notably different. Unlike taxi drivers, who tend to be individual self-employed operators, a significant portion of VTCs is owned by large companies, separate from the ride-sharing platforms.
José María Cazallas, Secretary of Organization at the Free Transport Union, points out that three major companies—Moove Cars, Auro, and Vecttor—control about 60% of VTC licenses in Madrid. Essentially, while Cabify and Uber may have stakes in these companies, they are distinct entities.
VTCs vs Taxis
The rise of VTCs cannot be understood without considering the historical context of taxis in Spain. Alejandro Román, a law professor at the University of Seville, notes that there was a one-license-per-taxi-driver model that dominated until the late ’90s. This created a market with limited competition and guaranteed profitability for drivers. However, the advent of Uber and Cabify altered this equilibrium.
With these apps entering the scene, the dynamics of taxi licensing began to shift dramatically. License prices for taxis dipped and soared, whereas VTC licenses have consistently risen in value. Currently, a VTC license can sit at approximately 180,000 euros in Madrid, while in Barcelona—home to regulatory uncertainties—the price averages around 75,000 euros.
Market Structure: A Landscape of Corporations
The operational model for VTCs diverges significantly from traditional taxis. The exploitation of VTCs is largely dominated by large corporations that own numerous licenses. Cabify owns Vecttor, while Uber has stakes in both Moove Cars and Auro. This structure contrasts starkly with the taxi sector, where individual drivers operate with limited licenses.
While the number of licenses per taxi driver is capped, VTC ownership allows for unlimited licenses. Cazallas mentions that Cabify has taken advantage of legislative loopholes to deploy 800 new licenses in Madrid as part of a larger package of 8,500 requested licenses. This raises concerns about market concentration, especially with Bolt arguing that such monopolization poses risks to market diversity.
Profiles of VTC Drivers
The workforce behind these VTCs features a diverse range of backgrounds. Many drivers are immigrants seeking opportunities in Spain, while others are older individuals transitioning from other careers. According to Cazallas, these drivers often work under shifting schedules, sometimes spanning three shifts per day.
As labor agreements have been negotiated, the average worker in Madrid generally earns around 1,400-1,500 euros net monthly, often for a 39-hour workweek. This contrasts sharply with taxi drivers, who often have more flexibility in how they distribute their earnings.
Future Challenges in the Industry
Beyond the operational differences, both taxi and VTC drivers face a looming challenge: the rise of autonomous vehicles. The government has plans to initiate pilot tests for driverless cars in Madrid by 2026, which could bring profound changes to the industry, raising concerns about employment stability and traffic regulation.
As the landscape for transportation continues to evolve with technology, it remains to be seen how both sectors will adapt to these upcoming shifts.