Guido Goebel stopped driving for Uber three years ago when the company abandoned his hometown, the German city of Düsseldorf, after a battle with regulators.
Several weeks ago, the ride-hailing service reached out to him again. Uber told Mr. Goebel that it was returning to Düsseldorf and offered him a bonus of 500 euros, or about $560, if he hit certain driving targets.
“It’s good. I’m busy,” Mr. Goebel, who had taken work driving patients to medical appointments, said from behind the wheel of a Mercedes-Benz C-Class. “People are happy Uber is here.”
Düsseldorf is the start of an effort by Uber’s chief executive, Dara Khosrowshahi, to reboot its business in Germany ahead of a planned initial public offering next year. When Uber re-entered this city of 600,000 last month, it was its first expansion in Germany since 2015, when it left every town except Berlin and Munich.
In 2015, Uber’s brash behavior under its former chief executive, Travis Kalanick, had strained its relationship with German regulators and ultimately forced it to retreat. This time, the company is back with a different strategy: Instead of barreling in by defying municipal and national rules around transportation, it is following them.
“Us Germans like a law book,” said Dennis Klusmeier, head of Taxi Düsseldorf. He said Uber drivers didn’t comply with the law that requires private-hire drivers to return to a garage between rides.
The old no-holds-barred strategy “clearly didn’t work,” and the product is now “tailor made for the market,” said Christoph Weigler, Uber’s general manager in Germany.
Germany is a test for whether Mr. Khosrowshahi can substantially bolster Uber’s business in places where it has had a problematic history. Since taking over late last year, he has withdrawn Uber from unprofitable areas like Southeast Asia and Russia to cut the company’s losses, which amounted to $1.07 billion in the third quarter.
But Mr. Khosrowshahi must also show growth ahead of taking Uber public next year, in what would likely be one of the biggest-ever technology offerings. As a result, he is refocusing on Europe, where the company can typically charge higher fares.
The road back into Europe is likely to be difficult. In London, Uber’s largest European market, the company fought off attempts to revoke its license but is now entangled in a lawsuit that would require it to pay a minimum wage and provide holiday time to drivers, who are freelancers. In Spain, taxi operators have successfully pressured politicians to limit how many Uber cars are on the road. Rules have also kept the company largely absent from Italy.
“They have identified Continental Europe as one of their major growth areas, but they are realizing once again that going abroad isn’t easy,” said Nils Stieglitz, president and managing director of the Frankfurt School of Finance and Management, who has tracked Uber’s business.
Germany is a particular prize because it is the world’s fourth-largest economy and the biggest in Europe, with several densely populated cities and an affluent, digitally savvy population.
Yet the country has a tangle of licensing rules that make it hard to recruit independent drivers. Germany requires drivers to pass health and driving tests, as well as receive a business license that includes a bookkeeping exam. Another rule orders drivers to return to a home base between trips, limiting how many rides can be made. Car-pooling services are banned.
Over the past year, Mr. Khosrowshahi has visited Germany twice to apologize for the company’s past behavior and to lobby to change some of the transportation laws. In one encouraging sign for Uber, the government said in March that it would update its transportation policy, though the deliberations could take years.
“There are still aspects of the regulation that we think could be tweaked to make our model slightly more scalable,” said Pierre-Dimitri Gore-Coty, the head of Uber’s operations in Europe.
While Uber waits for rule changes, it has teamed up with private car services and some taxi operators who already have the required licenses and drivers. It plans to introduce electric bikes in Berlin, the first city outside the United States where the Uber bikes will be available, and to eventually debut its food-delivery service in Germany.
Yet as Uber tries to muscle deeper into Germany after a three-year hiatus, it faces more competition. A service owned by BMW, DriveNow, lets people rent a car with an app for short trips around cities such as Berlin. Moia, a subsidiary of Volkswagen, is testing a ride-sharing bus service in Hamburg. MyTaxi, a taxi-dispatch app owned by Daimler, is also widely used. And there are fast-growing rivals such as Taxify, which provides rides in European cities.
“It’s very hard for them to compete on so many fronts at once,” Markus Villig, Taxify’s chief executive, said of Uber. Unless Uber can win major changes to German regulations, he said, “they are in a very tight spot.”
Uber said it had selected Düsseldorf as its re-entry point for expanding in Germany after seeing that customers there had logged into its app more than 150,000 times since January, even though no cars were on the road. Düsseldorf, about 350 miles west of Berlin, is a business hub and home to popular festivals that draw travelers. One boisterous area of town, called “The Longest Bar,” has more than 260 bars and dance clubs.
Uber knew it could not open in Düsseldorf as it had in 2014, when it first arrived. That year, Uber didn’t bother warning local officials it was coming. One morning, the app simply went live, and anybody was free to transform his or her car into a taxi without a license.
“It was against every rule we had,” said Rainer Matheisen, a member of the City Council at the time and now a member of the state legislature. In July, Uber contacted Mr. Matheisen and other Düsseldorf officials about trying again. The company vowed to follow all regulations by working with licensed drivers and taxi companies, and to make electric cars part of its fleet as a sign of good will for government efforts to fight air pollution.
“I was very skeptical because of what they did do in the past, but I was surprised by the new way of communicating with us,” Mr. Matheisen said.
By August, Uber was making final preparations to put cars back on the road. It opened an office in a co-working space in a downtown high-rise, where curious visitors can pop in to speak with staff about starting to drive. It plans to enter another German city, which it hasn’t identified, by the end of the year and several more in 2019.
Even after returning to Düsseldorf, Uber has faced an obstacle: taxi drivers. While the company has tried to work with taxi operators, dozens protested outside Uber’s office last month, blasting their horns and snarling traffic.
Dennis Klusmeier, head of the city’s largest taxi dispatch company, Taxi Düsseldorf, said Uber drivers didn’t comply with the law that requires private-hire drivers to return to a garage between rides. Holding a large law book that outlined German transportation rules, Mr. Klusmeier said he was exploring a legal challenge. “Us Germans like a law book,” he joked.
- Needing growth, Uber returns to Düsseldorf, Germany, on its best behaviour.