Future of transport

Chinese taxi app Didi Kuaidi to spend US$161m on promotional rides despite 90pc market share

PUBLISHED : Friday, 22 May, 2015, 6:48pm
UPDATED : Thursday, 03 September, 2015, 3:58pm

Didi Kuaidi, China’s dominant taxi-hailing app, said it will spend 1 billion yuan (US$161 million) to give free rides to passengers to promote its service as part of an ambitious plan to create a one-stop platform.

A 15 yuan discount will be provided to passengers of Didi Express, a new chauffeured service offered under the Didi Taxi app which charges lower fees. Passengers will be able to enjoy a free 10 kilometre ride up to two times per day.

The promotion, which starts next week and runs until June 15, will also include free rides on Mondays, the company's chief executive Cheng Wei announced on Friday.

Speaking at the first publicity event since the merger of Didi and Kuaidi in February, Cheng said the company intended to create an one-stop transportation platform integrating diversified online travel services.

In addition to the taxi-hailing and chauffeured services, the platform would also cover premium cars, express, carpooling and designated drivers services, he said.

China’s taxi-hailing apps entered a subsidy war last year providing refunds to both drivers and passengers as competition was fierce with players including Uber, Yidao Yongche and Car Inc providing similar services.

The cash-burning strategy, which substantially boosted the number of deals and the customer base for the three-year old Didi Dache, would continue and the amount of subsidies would be more than that of last year, Cheng said.

Jean Liu, president of Didi Kuaidi, said the company was investing to create social value in solving the travel needs in the country and that would eventually convert to increased business value for the company.

“We think that it's a trillion-dollar market covering consumers' travel needs in both taxis and private cars,” she said.

Didi Kuaidi’s taxi service now covers 360 cities with 1.35 million drivers, with almost four million daily orders of taxis, the company said. For the chauffeured service, orders reached up to 1.5 million a day.

“Three years from now, our goal is to allow everyone to hail a taxi or get a ride within three minutes and to serve 30 million people per day,” Cheng said.

The legal status of private car services offered by taxi-hailing apps has been in doubt and faced opposition from taxi drivers across the country as they were losing businesses to the car services. Mainland media reports said that Uber’s offices in Guangzhou and Chengdu were raided by Chinese officials earlier this month.

However, Didi Kuaidi recently saw a breakthrough as last week Shanghai said it would include the company in a new taxi-booking platform initiated by the government, the first official recognition of a private taxi app. 

Cheng said the company was in discussions with other local and municipal governments regarding car hailing services.