20 February 2019
General Views Of Shanghai's Economy

What now? Taxi-hailing apps take stock after rebates end

Since Didi and Kuaidi Dache announced the end of subsidies for drivers and passengers on May 17, the rival taxi-hailing apps have seen a considerable fall-off in usage.

Nothing surprising about that.

But considering that they have spent billions to attract users from both sides of the supply and demand market, what have they got to show for their money?   

For its 1.4 billion yuan (US$220 million) Didi got a very large chunk of the pie, according to China News. Kuaidi reportedly splashed out 1 billion yuan. The two control 97 percent of the market.

The subsidies were not entirely about the taxi-hailing business. They were part of a proxy war between two of China’s biggest internet operations — Tencent and Alibaba — which operate rival third-party payment services.

Tencent owns Didi and Alibaba Kuaidi. The two giants have a thriving third-party payment rivalry through Weixin and Alipay, respectively.

Didi chief executive Cheng Wei said that since the rebates ended, daily orders have tumbled 43 percent to three million from more than five million, but customers have taken to Weixin, with 85 percent of passengers using it.

A respectable 75 percent continue to use Weixin after the subsidies ended, according to DoNews.

Kuaidi and Didi handled more than 11 million orders a day on average in the first quarter. Assuming the number stabilizes to about half that level, it is still quite an achievement.

Both are already working on new ways to keep their customers interested.

These include Kuaidi’s taxi-booking hotline for senior citizens who felt disenfranchised by their lack of knowledge about the apps. Also, expectant mothers may redeem points to get a free ride.

Taxi app users are expected to climb steadily as services improve. As market leaders, Didi and Kuaidi could soon approach the success of their overseas counterparts such as Uber, the United States taxi-hailing business which charges drivers a 20 percent commission on each transaction.

A recent round of fundraising which attracted a large number of investors valued Uber at more than US$17 billion, according to the Wall Street Journal.

–- Contact the writer at [email protected]



EJ Insight writer

EJI Weekly Newsletter

Please click here to unsubscribe