Chinese bike-rental companies are taking action to bolster profitability amid huge losses and major cash flow constraints. Mobike announced on Monday that it will raise prices for bike rides in the capital city of Beijing, following a similar move by Bluegogo just days earlier.
According to a notice dated Monday released on Mobike’s mobile application, Beijing riders will be charged RMB 1 (around $0.15) for a trip up to 15 minutes, and RMB 0.5 for every additional 15 minute increment. This is double the going rate, RMB 1 for a 30-minute ride.
The new rates, which go into effect Apr. 8, will help the company operate sustainably, according to the statement. Mobike also said the price increase will not apply to users who bought into its discount program, which charges flat rates for unlimited rides for one, three, and six months.
Bluegogo announced its new rates on Mar. 21 with the same prices. The Didi-backed bike-rental platform had unveiled a set of punitive measures days earlier to combat misbehaving riders, who in serious cases could be banned from the service for up to 90 days.
Although neither platform has launched the new rates in cities other than Beijing, the rise in prices reflects a small but significant shift in the Chinese sharing economy sector, where most players have been struggling for the past year. Research from equity firm China Tonghai Securities show that after accounting for losses of RMB 4.6 billion to its parent company Meituan in 2018, Mobike will be loss-making until 2021.
Other bike-rental companies are considering raising prices, as warmer weather brings a likely rebound in trip numbers. A company spokesperson from Hello TransTech told TechNode on Monday that the platform is maintaining its original pricing but “does not exclude the possibility of a price increase in the future,” as it has been a growing trend in the industry (our translation).
Ofo, another once-promising startup, has stumbled repeatedly in the past several months as headlines about debts and layoffs plague the bike-rental company. It announced in March eight corporate corruption cases reported to local police in a period of three months. These includes a former employee surnamed Su illegally selling Ofo bicycles worth a total of RMB 2 million in China’s southeastern Fujian province, according to an internal company letter obtained by Chinese media.