Didi announced on Monday that it will raise ride fares in the capital city of Beijing beginning July 11 to attract more qualified drivers as shortages become a major concern for ride-hailing services.

Why it matters: Didi’s challenges mount as competition intensifies and regulation remains strict, prompting concerns that it will further cede share to other players.

  • The Chinese ride-hailing giant spent nearly a third of its commission revenue on driver subsidies in the fourth quarter of 2018.
  • However, around a fifth of total ride demand on its lower-cost Express ride-hailing service goes unmet on weekday mornings in Beijing due to labor shortages, Didi said in an announcement.

“The disparity between supply and demand in Beijing has grown severe despite taking a series of measures to ease the situation.”

Didi announcement

Details: Base fares for Beijing riders will increase RMB 1 to RMB 14 (around $2) during morning and evening peak times, as well as for late night service.

  • Per-kilometer rates will increase to RMB 1.8 from RMB 1.6 during the morning rush hour, and late-night riders will pay a more than 30% premium to RMB 2.15 per kilometer. The base charge during off-peak periods (10 a.m. to 5 p.m.) will remain unchanged.

Context: Chinese ride-hailing companies have shifted focus from competing for users to attracting qualified drivers, a limited resource in many cities, according to a Jiemian report citing Wei Dong, CEO of state-owned ride-hailing service Shouqi.

  • Chinese regulators began enforcing rules on legally qualified drivers following two separate murders of female passengers by Didi drivers. The city governments of Beijing, Shanghai, and Tianjin all began requiring that only drivers with identity cards for each city could drive for ride-hailing services beginning in 2016.
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Jill Shen

Jill Shen is Shanghai-based technology reporter. She covers Chinese mobility, autonomous vehicles, and electric cars. Connect with her via e-mail: jill.shen@technode.com or Twitter: @yushan_shen

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