Didi invests in Tencent-backed ride-hailing start-up amid efforts to expand strategic alliances
- OnTime, which also counts GAC Group as an investor, was set to launch its service later this month in Guangzhou
- Didi will help the new ride-hailing player in areas such as technology development, transaction strategy and customer service
Didi Chuxing has invested an undisclosed amount in OnTime, a new ride-hailing service provider backed by Tencent Holdings, in a move that widens its strategic alliances as competition in the domestic market heats up.
Beijing-based Didi, operator of China’s largest ride-hailing platform, announced that deal as part of an agreement with Guangzhou Automobile Group Co (GAC Group) to expand their partnership into areas such as ride-hailing operations, fleet management, autonomous driving and other smart vehicle-related technologies, according to a joint statement from the two companies on Wednesday.
“Didi is committed to building an open, inclusive, mutually beneficial mobility ecosystem,” said company founder and chief executive Cheng Wei in the statement.
OnTime, which also counts GAC Group and Guangzhou Public Transport as investors, was set to launch its service later this month in Guangzhou, the capital and most populous city in the southern coastal province of Guangdong.
Tencent-backed ride-hailing start-up OnTime to launch in Guangzhou before expansion into Greater Bay Area
As an investor in OnTime, Didi said it will provide its expertise to support the new ride-hailing player in areas such as technology development, transaction strategy, and customer service and response mechanisms.
A Didi spokesman declined to comment on the amount of investment the company made in OnTime or provide any other information beyond the released statement.
The move comes as Didi – in which Apple, Alibaba Group Holding and Tencent are major investors – is battling new competition from broader online platforms.
Earlier this month, Meituan Dianping launched its aggregated ride-hailing service in 10 Chinese cities, including Beijing. The on-demand services giant enables users of the new service to compare offers from several platforms, such as Geely’s Caocao Car and Shouqi, and then hail a ride via the Meituan app.
Didi opens the door to third-party ride-hailing players as fight to build China’s best super mobility app heats up
AutoNavi, Alibaba’s maps app with 100 million daily users, has its own aggregated platform that allows users to book rides. New York-listed e-commerce giant Alibaba is the parent company of the South China Morning Post.
Didi had opened its platform to smaller rivals in May, under a pilot programme in Chengdu, capital of Sichuan province in southwest China, where users can also choose to hail a ride dispatched by Miaozou, a mobility unit under online travel platform Tongcheng-Elong.
Zeng Qinghong, chairman of GAC Group, said in the statement that the company’s expanded partnership with Didi represents the broader industry trend of “progressive integration” between the automotive industry and new hi-tech players.
Still, an increasing number of carmakers have also been piling into the ride-hailing market. Last month, electric vehicle start-up Xpeng Motors launched a mobility service in Guangzhou. BMW announced in November it had secured a ride hailing permit for Chengdu, making it the first global carmaker to gain such access in China. A ride-hailing platform backed by state-owned carmaker Shanghai Automotive Industry Corp also began trial operations in Shanghai last year.
Didi reveals it is still making losses on many fares charged in China as it discloses costs breakdown
Founded in 2012, Didi merged with rival Kuaidi Dache in 2015 and then beat out US-based Uber Technologies in China after an expensive subsidy war in 2016.
Although Didi has an estimated market penetration of 88 per cent in China’s ride-hailing sector, the company revealed in April that it was still losing money on many trips. 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.
