Didi teams up with state-owned FAW to hire ride-hailing drivers

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Another state-owned automotive company has joined the already crowded ride-hailing market, after Shanghai-based Saic Motor set up a new department and started exploring ride-hailing business

FAW Group Corporation is partnering with Didi Chuxing, China’s largest ride-hailing platform, to hire drivers in Changchun, where FAW Group is based. According to a hiring manager with FAW, the company only provides one car model for now. The Corolla Hybrid is a new energy vehicle produced by FAW Toyota Motor Sales, a joint venture between FAW and Toyota.

Drivers first need to register with Didi, rent the Corolla Hybrid cars and then start providing the service. The rental business uses the rent-to-own model. Drivers need to make a down payment of RMB 20,000, a RMB 4,300 monthly payment for 3 years and a remaining balance of RMB 15,000. The rates of compensation and withdrawal commission will subject to Didi’s policy which hasn’t been settled yet.

Because of stricter controls on ride-hailing business in China’s first-tier cities, FAW will focus on the markets of second to third tier cities, the manager said.

FAW neither participates in the operation of the ride-hailing business, nor is responsible for how many orders the drivers take. This makes the deal more like boosting sales of the car model.

FAW, founded in 1953, was China’s first automotive manufacturing company. For Didi, the agreement guarantees a stable supply of cars and since many of the manufacturing companies are producing more policy-favored new energy cars, car plates will be easier to obtain. For FAW, not only the value of ride-hailing market is expected to grow to RMB 23.8 billion in 2020 from RMB 700 million in 2018, but also cooperating with tech companies can help these legacy auto manufactures expand their online business.

Before this, Didi signed a strategic agreement with 31 automotive manufacturing business, including FAW, in April on corporate cooperation and developing new energy cars. The deal tries to unite FAW’s manufacturing capacity and Didi’s data and technology in smart transportation.