China’s Biggest Carmaker Rolls Into Ride-Sharing Market
SAIC Motor Corp., China’s largest automaker, became the latest conventional automaker to roll into the burgeoning ride-hailing market in search of a new source of growth.
SAIC Motor unveiled its ride-hailing brand, Xiangdao Chuxing, on Tuesday. The company will put 1,000 vehicles in service starting in Shanghai and expanding into more cities next year, according to the Shanghai-based automaker.
The SAIC Motor move followed a number of other major Chinese automakers tapping into the ride-hailing business, a market currently worth about $23 billion a year, according to consultancy Bain & Co.
Carmakers are counting on the massive potential of the market for new growth. Annual transactions in China’s ride-hailing market will more than triple to $72 billion by 2020, said Wu Bing, chief executive officer of SAIC Motor’s ride-hailing unit.
“The market will become a crucial battlefield and cradle of new brands,” Wu said. He called ride-hailing the widely recognized future for auto manufacturers.
SAIC Motor obtained a ride-hailing license in Shanghai in September and started a trial business in mid-November, Wu said. Over the past month, the service has attracted 600,000 registered users and provided more than 300,000 rides.
Xiangdao Chuxing will recruit its own team of drivers and work with professional fleets, offering services targeting the higher-end segment of the market, Wu said.
China’s ride-hailing market is bigger than that of the rest of the world combined, according to Bain & Co. But 82% of the market share is controlled by leading player Didi Chuxing, which was hit by several setbacks this year because of security concerns after multiple riders were raped and two were murdered by drivers.
Industry analysts said smaller players and newcomers will continue to chip off pieces of the market and will gradually reduce Didi’s share to around 70%. Ministry of Transport data showed that as of July 31, 49 ride-hailing companies were operating in China.
Slowing auto sales are pushing carmakers into ride-hailing and mobility services. In November, car sales in China declined 13.86% from a year ago as the market moves toward its first annual drop in 28 years.
SAIC Motor reported a 10.4% sales decline in November from the previous year, the third consecutive monthly decrease.
SAIC Motor in 2016 launched a timeshare rental operation unit to diversify its business. The service currently operates 38,000 vehicles in 40 Chinese cities.
Rival Shouqi Group started a ride-hailing service in 2015 and expanded to 60 cities. Private carmaker Geely Holding Group’s ride-hailing unit Caocao is the second-largest ride-hailing provider after Didi, according to Transport Ministry data.
In October, Daimler AG and Geely agreed to set up a 50-50 joint venture to offer ride-hailing services. Earlier this month, state-owned automaker Dongfeng Motor Corp. said it won a ride-hailing business license in Wuhan, Hubei Province.
Cai Bin, general manager of SAIC Group’s mobility service department, said the younger generations of consumers, who are more adapt at internet technology, will prefer ride-hailing services over car ownership more than older generations. By 2020, the ride-hailing market will grow elevenfold from 2015, Cai said.
Contact reporter Han Wei (email@example.com)
Mar 22 19:22
Mar 22 18:30
Mar 22 18:32
Mar 22 17:54
Mar 22 15:06
Mar 22 12:45
Mar 22 00:02
Mar 21 17:12
Mar 21 17:16
Mar 21 16:52
Mar 21 15:49
Mar 20 19:25
Mar 20 18:20
Mar 20 17:07
- 1HNA’s Latest Asset Sale Attracts U.S., Indian Bidders: Source
- 2China Became Net Importer of Rare Earths in 2018
- 3Popular WeChat Account Valued at 2 Billion Yuan Snapped Up By Education Firm
- 4China Securities Regulator Sets Out Ambitious 2019 Work Plan
- 5Update: It’s Banks’ Turn for the Hot Seat of Supply-Side Reform
- 1Power To The People: Pintec Serves A Booming Consumer Class
- 2Largest hotel group in Europe accepts UnionPay
- 3UnionPay mobile QuickPass debuts in Hong Kong
- 4UnionPay International launches premium catering privilege U Dining Collection
- 5UnionPay International’s U Plan has covered over 1600 stores overseas