Volkswagen China and Mercedez Benz have partnered to launch a premium ride-hailing service in Shanghai, signaling mounting segmentation in the crowded ride-hailing sector and increased competition in the high-end market.

Passengers in Shanghai can book one of 50 Mercedes Benz E200L vehicles via Volkswagen’s ride-hailing app, official WeChat account, and the company’s hotline. Volkswagen owns the three booking channels.

According to Chinese media, drivers wear suits while cars are equipped with WiFi, iPads, drinks, and umbrellas. The iPads double as a screen for displaying passengers’ names during airport pickups.

The companies have selected 50 drivers who previously served government officials and guests during events including the 2010 World Expo and Asia Pacific Economic Cooperation forum (APEC).

The Volkswagen-Mercedes Benz tie-up is an aggressive step into the high-end ride-hailing market eyed by global luxury car manufacturers. On Dec. 14, BMW launched its ReachNow service in Beijing and Chengdu. Shenzhou, Shouqi, and Didi Premium are existing players in the high-end field.

The move also highlights the growing trend by manufacturers to seek new revenue models. By the end of October, car sales in the world’s second-largest economy had dropped by 23% year-on-year. Meanwhile, September sales of Volkswagen’s joint ventures with First Automobile Workshop (FAW) and SAIC Motor dropped 5% and 9% year-on-year respectively.

Volkswagen was also reportedly in talks with Didi in April to manage a fleet of the Chinese ride-hailing giant’s for autonomous vehicle projects in the future.

In response the Volkswagen-Mercedes Benz partnership, Didi told TechNode that the company welcomes more players to the ride-hailing industry to provide diversified mobility services to users, without elaborating.

Runhua Zhao is a technology reporter based in Beijing. Connect with her via email:

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