CHINA TOPIX

11/21/2024 11:50:41 pm

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Didi Chuxing Expands Business to Car Rental Services

Didi Chuxing

(Photo : Getty Images) Didi Chuxing is currently under the microscope of Chinese regulatory authorities over its acquisition of Uber China.

Following its highly publicized acquisition of Uber China, China's leading ride-hailing company Didi Chuxing is expanding its business to car rentals.

Didi Chuxing announced on Monday that it is launching an online car rental business which was created through an asset-light model in collaboration with existing leasing firms. The financial terms of the recent Didi Chuxing deal were not disclosed.

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A study published in 2015 found that more than 58 percent of 2.34 billion of China's domestic tourist trips were completed though rental cars. The number is expected to grow to more than 5.6 billion by 2020, according to an estimate made by the China Tourism Automobile and Cruise Association.

An estimate released by Roland Berger Strategy Consultants said that China's short term car rental market would grow from $900 million in 2013 to a $2.7 billion market in 2018. In terms of growth rate, China's car rental market will outpace that of Japan, United States, and other fully developed markets.

Rather than creating its fleet of rental cars, Didi Chuxing would rely on existing fleets of car rental and leasing companies in an asset-light, high-efficiency, sharing economy model. According to China Tech News, Didi Chuxing would provide data-driven and rider-vehicle matching system to its partners to operate efficiently, thus reducing operational costs, and have a better-organized operation for the comfort of their customers.

Didi Chuxing's car rental service has been in beta testing since July. The company started testing its new business in the Shanghai, with plans to expand to tier first and second tier cities within the first half of 2017.

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