Just a few days after receiving US$142 million in funding from Weibo, China’s dominant taxi app company coalition Didi-Kuaidi is making further headlines with the launch of a carpooling service ‘Didi Shun Feng Che’. The feature will be added to Didi Dache’s app, aiming to curb traffic gridlock in China’s cities.
By leveraging Didi-Kuaidi’s big data and advanced matching techniques, the service will calculate routes and match car owners and passengers for carpooling. Car owners can set up default routes, while passengers provide the locations of departure and arrival and the service will automatically find matches.
Last year, the government reiterated that it was illegal to run for-profit ride-sharing services in China, restricting for-profit rides to accredited drivers only. In reaction, Uber launched its People’s Uber pilot program, which allows public ride sharing so long as the price only covers the actual cost of the ride, without a profit margin.
Likewise, the cost of the new Kuaidi Didi project will also cut out profit margin in accordance with the law, and a standard ride fee will cost between 5-10 yuan (US$0.80-1.60) with an additional 1 yuan ($0.16) added per kilometer. The standard fee for the profit-driven taxi model in Beijing is 13 yuan.
In order to ensure safety, Shun Feng Che requires WeChat authorized login and validation of WeChat payment from passengers, with drivers required to have a license check. Shun Feng Che will purchase insurance of 500,000 yuan for each trip.
The company claimed that Shun Feng Che has recruited over 1 million car owners in less two months during their trial period, and they claim their orders will reach 100,000 within a month. The service is expected to cover over 26 cities across China, starting from Beijing by the end of June, the firm added.
China Turns from Premium Services to Carpooling
After the heated competitions in the premium ride market, the tide in Chinese ride-sharing industry is swinging towards carpooling services, a field which is still in its infancy in China.
Dida Pinche, a carpooling app, has secured a massive US$100 million investment this May. Another rival Haha Pinche also received a US$10 million series A investment last August. Internet giants like Baidu, which invested an undisclosed amount of financing in Uber, also joined the war with investments in two ride-sharing apps of Tiantian Yongche and 51yche.
This shift may to some extent contribute to the desire to avoid policy risks. China’s Minister of Transport has said that private cars will never be allowed to operate as commercial vehicles.
Since private cars account for a considerable part of many premium fleets, regional authorities have initiated measures to crack down on premium services. However, the government is quite supportive of carpooling service in theory, as it promotes China’s greener transport goals.
Car-rental services like Zuche, eHi and Yongche entered the premium car services market using only licensed drivers. But they can’t meet the rising transportation demands when competing against a vast pool of private cars and high costs.
What’s more, most premium services focus on first-and second-tier cities, where it is difficult for them to expand. Carpooling services have a distinct advantage, when drivers are able to use the technical platform without limitations.
Image credit: Didi-Kuaidi