Didi launches car rental service in China
Tue 23 Aug 2016
Ride-hailing giant Didi Chuxing is adding a car rental service for customers in several cities, to take advantage of the enormous domestic tourism market in China. Users can reserve a car through the Didi app and have it delivered to their door within two hours.
The service, which is currently in beta testing in Shanghai, is expected to expand to several more cities in China over the next year. In a statement the company said, “Didi car rental is launched in response to the boom in China’s short-term and tourist car rental market as the population goes through a lifestyle revolution.”
In 2015, 2.34 billion cars were rented for domestic tourists in China. That number is expected to more than double, reaching 5.8 billion by 2020. The car leasing market for 2016 is expected to provide $8.6 billion in revenues this year, with 18% annual growth every year for the last five years.
Much of this is due to China’s large middle class, many of whom prefer short-term rentals to car ownership. Also, the Chinese government’s anti-corruption crackdowns have caused businesses and local governments to provide rented or leased cars rather than purchasing company cars for employees, further sustaining growth in the car rental market.
Didi will partner with existing car rental services who will provide the automobiles through the Didi app. This allows Didi to avoid the expense and trouble of maintaining its own fleet of vehicles, while still providing a valuable new service to customers. Users can select from a range of rental options, including cars, SUVs, and multi-purpose vehicles (MPVs).
On August 1, the company announced its intention to merge with Uber China. While the merger still requires approval from Chinese regulators, should it go through, the new Didi-Uber will have 90 percent of the market share for ride-hailing and car-sharing services in China.
Didi Chuxing was also the only company from mainland China to be included on Fortune’s 2016 ‘Change the World’ list. The company was included at number 30 on the Fortune list for being a ‘pollution buster’, based on Didi’s estimation that its ride-hailing and car sharing services helped to reduce the total number of car trips in China by 1 million per day, saving gas and cutting carbon emissions throughout the country.