Didi to invest US$1 billion in one-stop car services business
New company Xiaoju Automobile Solutions is expected to help ride-hailing giant Didi keep partners and customers glued to its ecosystem of services
Didi Chuxing, China’s largest ride-hailing services provider, said on Monday it will invest US$1 billion in its fledgling automotive solutions operation as part of a broader rebranding of the business ahead of the company’s anticipated public listing next year.
That business, which was launched in April, has been named Xiaoju Automobile Solutions, set up to provide Didi drivers and the larger car-owner community across mainland China with various services, including leasing and trading, refuelling, maintenance and repair, and car rentals, according to Didi.
“The creation of Xiaoju Automobile Solutions is not only a key step towards achieving Didi’s automobile alliance strategy, but also a milestone in organisational innovation as we continue to expand our business horizon,” Cheng Wei, co- founder, chairman and chief executive of Didi, said in a statement.
Xiaoju Automobile Solutions, estimated by Didi to have an annualised gross merchandise volume exceeding 60 billion yuan (US$8.8 billion), is currently available in 257 mainland cities, comprising a network of more than 7,500 partners and distributors.
The one-stop car services operation, which was incubated by Didi in 2015, was built on the ride-hailing giant’s experience serving the requirements of 30 million drivers on its platform, according to Kevin Chen, the newly appointed general manager of Xiaoju Automobile Solutions. Chen will report directly to Didi president Jean Liu Qing.
Didi’s US$1 billion outlay in Xiaoju Automobile Solution marks the first batch of investment it plans to make in that new subsidiary, according to an internal document obtained by the South China Morning Post.
The Didi announcement has come amid increased competition in China’s ride-hailing services market.
In June, Chinese transport company Shouqi launched an English-language version of its ride-hailing app to target expats travelling and working in the country. Over the past two years, China’s ride-hailing market has also attracted new players like Meituan Dianping, the country’s largest on-demand services provider, and Caocao Zhuanche, backed by online travel services giant Ctrip and carmaker Geely.
Didi, which counts tech giants Apple, Alibaba Group Holding and Tencent Holdings among its biggest shareholders, has been the dominant player in China’s ride-hailing market after acquiring Uber Technologies’ business on the mainland in 2016. Last year, Didi handled 7.4 billion rides, compared with Uber’s 4 billion trips. Alibaba is the parent company of the Post.
Beijing-based Didi is also considering an initial public offering in the second half of next year, according to people familiar with the matter.
Despite the heated competition in ride-hailing services, Xiaoju Automobile Solutions is expected to help Didi keep partners and customers glued to its ecosystem of services.
Didi Car Sharing, one of the operations under Xiaoju Automobile Solutions, provides short-term car rental services that leverages the ride-hailing firm’s brand and user base.
The country’s car-sharing market has a potential value of 1.8 trillion yuan, with daily rentals forecast to reach 37 million this year, up from 8.16 million in 2015, according to EvCard, the Shanghai-based electric car rental subsidiary of SAIC Motor, which has also entered the ride-hailing business.
“Didi believes that only by serving drivers better, will we be able to serve passengers better,” Cheng said.