Volkswagen Joins Forces With Didi to Tap Ride-Hailing Trend

Didi Chuxing has confirmed the establishment of a joint venture with Germany’s Volkswagen, the latest sign yet that ride-hailing companies and automakers have turned from competition to collaboration to better tap the Chinese commuter market.

The tie-up comes as the emergence of ride-hailing platforms, such as Didi and Shouqi, have threatened traditional automakers as increasing numbers of consumers have opted to share rides rather than own their own cars. The change has been a drag on Chinese auto sales, which suffered their first decline in 28 years in 2018.

Didi Chuxing Technology Co. Ltd. confirmed the joint venture with Caixin on Tuesday, one day after it was widely reported that the Chinese company had set up the new entity with Volkswagen in December.

With its 550 million users, Didi commands over 90% of China’s ride-hailing market. The company said its more than 30 million active drivers provide more than 30 million rides a day.

According to company data provider Tianyancha’s public records (link in Chinese), the joint venture is registered in Shanghai with 64 million yuan ($9.56 million) in capital. Didi owns 60% of the company’s shares, with Volkswagen Group China holding the remainder.

The joint venture will explore “fleet operations, management, repair services, maintenance and leasing,” Didi said in a statement to Caixin. It added that the venture will work with other automakers on smart mobility.

The new company will procure vehicles produced by Volkswagen as its main business, according to Tianyancha’s record.

The development follows Didi’s formation of an alliance with more than 30 carmakers and technology firms in April — a move in which Didi exchanges its customer management and operational know-how for automakers’ design expertise. Members of the alliance include Volkswagen, BAIC Motor Corp. Ltd., China FAW Group Co. Ltd., BYD Co. Ltd. and Robert Bosch GmbH.

In December, 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 unveiled its ride-hailing brand, Xiangdao Chuxing, and said it would put 1,000 vehicles into service starting in Shanghai and then expanding into more cities this year.

In October, Daimler AG and Zhejiang Geely Holding Group Co. Ltd agreed to set up a 50-50 joint venture to offer ride-hailing services. State-owned Dongfeng Motor Corp. last year also won a ride-hailing business license in Wuhan, Central China’s Hubei province.

Contact reporter Jason Tan (jasontan@caixin.com)