Didi Kuaidi joins China Merchants Bank to provide car financing for drivers
Car-hailing app operator looks to launch credit and debit cards with the lender in second quarter
China’s top car-hailing app operator Didi Kuaidi has entered into a strategic partnership with China Merchants Bank to provide car financing to its 14 million drivers.
China Merchants has agreed to make a strategic investment in Didi but the size of investment was not disclosed, the two companies announced in Beijing on Tuesday.
The bank is joining a list of China’s big names as Didi’s investors, including the country’s sovereign wealth fund China Investment Corp, internet giants Alibaba, Tencent and Beijing Automotive Group.
Liu Qing, president of Didi, said China Merchants Bank would provide automobile financing to the car-hailing app’s drivers for them to buy new cars by instalment. The loan terms and payment plans will be based on a joint review by both companies.
The two firms would continue to seek close ties in automobile credit and other financial services, Liu said.
Of the 14 million registered Didi Kuaidi drivers, six million were active and some had indicated their need to replace old cars or buy a new one, Liu said.
“From China Merchants Banks’ perspective, they love this business but they worry about risk control and steady revenue income,” she said.
“We have the capability to grow the user base and driver base even without financing plans, but for this year, our focus is to continue to add value to users and drivers. Using smart financing plans to get a car or replace the old one will be beneficial,” Liu said.
READ MORE: Didi Kuaidi, other car-hailing apps ‘adding to Beijing’s traffic problems’ says transport chief
With more than 250 million users covering 400 cities in China, Didi will also work with China Merchants Bank to launch credit and debit cards in the second quarter.
An in-app credit card payment will be added to Didi’s mobile app under the strategic partnership, adding to the current mobile payment services provided by Tencent’s WePay and Alibaba’s Alipay.
Zhao Ju, executive vice-president of China Merchants Bank, said the collaboration with Didi marked an important step for the bank to expand into the mobile payment market, which had been dominated by WePay and Alipay.
“As a bank, we hope to catch up with the mobile payment trend and gain some market share,” Zhao said.
Uber, Didi’s major rival, also announced on Tuesday that it would expand into 18 new cities across three provinces in South China by the end of next month, covering a total of 55 cities.
Didi and other car-hailing apps were criticised on Monday by Beijing’s local transport commission for adding to the city’s notorious traffic congestion.
Liu said car sharing was a solution to traffic jams as it reduced the number of cars on roads. “The number of cars reduced by us is way more than the number of cars added.”