Chinese biggest ride-hailing platform Didi Chuxing is planning to expand its presence in public transport sector over the next three years outlined in a set of new growth targets, according to a Chinese media report.
Why it matters: Didi’s recent moves are a signal that it is refocusing on growth and profitability after tinkering with its safety policies after the murders of two passengers by Didi drivers in 2018.
- The ride-hailing platform urgently needs to turn a profit after losing money for the more than six years its business has been operating, including a reported RMB 10 billion ($1.48 billion) loss in 2018. It spun off its self-driving unit in August to share the heavy development costs with external investors.
Details: Didi on Tuesday informed employees about a series of targets for the next three years, including daily orders of more than 100 million and monthly active user base of 800 million globally, according to an internal letter obtained by Chinese media Late Post.
- Meanwhile, Didi said it is targeting an ambitious 8% penetration rate for the broader mobility market, including public transport like bus rides and private transport like ride-hailing.
- The Softbank-backed mobility platform is the leader in China’s ride-hailing industry with more than 27 million rides on average each day last year, far outpacing of its rivals. It has also been ramping up businesses in shared bikes and private chauffeurs, two major private transport segments.
- However, it has made little headway in public transport such as bus service, an area mainly controlled by local governments. A company insider told Late Post that a 8% penetration rate could be “challenging” given the company’s limited involvement in the market.
Context: Didi launched in July 2015 the “Didi Bus,” an on-demand shuttle bus service in Beijing and Shenzhen, according to TechCrunch. It then formed a RMB 16 million joint venture with state-owned Shenzhen Bus Group in March 2016.
- Armed with a massive trove of transport data processed in real time on cloud servers, the company said its services were more flexible and demand-responsive with peer-to-peer pick-up and one-stop rides, in contrast with the fixed routes and limited schedules provided by traditional bus operators.
- The initial target was wildly optimistic: expansion into more than 30 domestic cities with a budget of RMB 500 million by the end of 2015. However, riders from just a dozen or so cities so far have used the service, including residents of Qingdao in eastern Shandong province and Xi’an, capital of northwestern Shaanxi province.
- Didi did not respond to a request for a comment when contacted by TechNode on Wednesday.