The car-hailing service Uber is taking on New York City's taxis, temporarily dropping some of its prices by 20 percent.
The company says the price of its UberX lower-end service is now cheaper than the rate charged by the city's famous yellow cabs. For instance, a ride from Grand Central Terminal to the financial district would now cost roughly $22, down from $28 before the sale. Uber said a similar ride in a yellow taxi costs $24.
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The sale in the nation's largest city — one heavily dependent on taxis — comes following similar temporarily reductions in the past month in Atlanta, Boston, Washington D.C., Los Angeles, Chicago and San Francisco. Uber says if the reduced fares attract more passengers, it's more likely to keep the prices low.
The trade group for taxi cab drivers said that Uber is just lowering prices to knock out the competition and will later increase its fee. Ethan Gerber, executive director of the Greater New York Taxi Association, added in a statement that yellow taxis are "the most reliable, most regulated cabs" and that Uber's sale is "more about generating publicity then building a solid product."
Founded in 2009, Uber connects cars with passengers though its GPS-enabled smartphone app. Many of its drivers have black Lincoln Town Cars or SUVs and compete with traditional limo or car service companies where passengers make a phone call to arrange a ride. Uber users instead verify their location on a smartphone map, request a car, see how many minutes away it is and then track its progress as it drives to their location.
The San Francisco-based company also offers a cheaper car service called UberX. The run-of-the-mill sedans and minivans passengers jump in lack the luster of the shiny black Town Cars but come at a lower cost. That service is the one now on sale. The discounts range from 20 to 25 percent, depending on the city.
The lower fares do not factor in Uber's "surge pricing" — a different rate that is charged when there is great demand for cars. For instance during heavy rain or snowstorms or busy holidays like Halloween or New Year's Eve, Uber might double or triple its rates in some neighborhoods.
Besides traditional taxis and car services, Uber competes with other smartphone based car services like Sidecar and Lyft, which is entering the New York market this week.
The car services have also found resistance from taxi regulators in cities like Washington and New York and from the airport authority in Los Angeles. Uber has also been sued in San Francisco by the family of a 6-year-old girl killed after being struck by an Uber driver while she was in a crosswalk.
Scott Mayerowitz can be reached at http://twitter.com/GlobeTrotScott.