Didi reveals it is still making losses on many fares charged in China as it discloses costs breakdown
- In Didi’s expenditure breakdown, about 10 per cent of fares were used to cover items such as technology research, offline maintenance and customer service
Didi Chuxing, China’s largest ride-hailing platform, has revealed it is still losing money on many trips after one of the world’s most valuable start-ups publicly disclosed its expenses breakdown for the first time.
In a statement published earlier this week, company executive Chen Xi said Didi pocketed about 19 per cent of each fare in China on average in the three months ended December 31, while its overall cost per journey was about 21 per cent.
“The gap of 2 per cent is shouldered by Didi itself, made up from the capital raised in previous funding to cover [the loss],” said Chen, who oversees the ride-hailing business. “As a company, the situation is not sustainable in the long run, as we may not be able to continue normal operations if we run out of money one day.”
However, he added that such losses are a “common phenomenon” across the ride-hailing industry as a whole. Loss-making Didi has kicked off a large-scale organisational restructuring and “optimised” 2,000 jobs since the start of the year as it pares back operational costs, said Chen.
In Didi’s expenditure breakdown for the fourth quarter last year, about 10 per cent of fares were used to cover operations such as technology research, offline maintenance and customer service. Another 7 per cent was given to drivers during rush hour and those operating in densely populated regions as incentives, while 4 per cent was spent on taxes and online-payment transaction fees.