Date
24 November 2017
Uber usually works with car rental and limousine companies in places with strict restrictions on taxi services. Photo: Bloomberg
Uber usually works with car rental and limousine companies in places with strict restrictions on taxi services. Photo: Bloomberg

How Uber-Yongda deal breaks down into a win-win

Mainland luxury car dealer China Yongda Automobiles Services (03669.HK) has signed a strategic deal with Uber, the taxi-hailing company.

Yongda will offer discounts and loans to car rental companies that partner with Uber.

Like Hong Kong and other areas, China prohibits drivers with unlicensed vehicles from charging passengers.

That makes Uber’s most popular UberX service, which lets drivers share rides and earn money, unworkable in China.

As a result, Uber usually works with car rental and limousine companies in places with strict restrictions on taxi services.

Under the deal, Yongda will initially sell Audi and Volkswagen cars to Uber partners at discounted prices.

Other brands such as Jaguar and BMW will be added to the list in the near future.

Besides offering discounts, Yongda will lend as much as 200 million yuan (US$32.3 million) in car loans to Uber partners at relatively low interest.

Uber is trying to expand its partnership model in the mainland to compete with local incumbents such as Didi Dache, Yongche.com and Kuaidi One.

The strategic deal with Yongda is a win-win.

Yongda can leverage the partnership to boost sales while Uber can attract more partners, enabling it to grow its fleet.

– Contact us at [email protected]

RA

EJ Insight writer

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