Uber strikes back against Didi’s heavy discounts for Chinese car-pooling service

From Baidu.

Uber China has re-launched its “People’s Uber” car-pooling service as “People’s Uber+” in Beijing and is now offering a 50% discount to attract users, NetEase reports on Thursday.

The service first went briefly online in Beijing in October. It is currently available in several major Chinese cities including Beijing, Shanghai, Guangzhou, Shenzhen and Hangzhou.

Uber’s global carpooling service UberPool launched at company headquarters in San Francisco in August, 2014.

Uber China says its system uses algorithms to plan the quickest routes based on user destinations, matching car-pooling partners to cut costs.

The carpooling business is important for ride-hailing companies because the Chinese Ministry of Transport released a new set of regulations curbing the ride-hailing business last October. The regulations encourage car-sharing and carpooling for non-profit use.

Uber’s top rival in China, Didi Kuaidi offers a 60% discount for many of its services escalating the competition with Uber.

Uber founder and CEO Travis Kalanick said on Monday that Didi Kuaidi is spending USD 70-80 million weekly and about four billion a year on subsidizing its drivers, and claims that Uber is spending far less than that.

Didi Kuaidi Senior Vice President Tao Ran responds that the data Uber China touts is not convincing. He says Uber spent more than USD 1.5 billion last year on subsidizing Chinese users, Beijing Morning News reports.

The cash burning race between Uber and Didi Kuaidi will likely not end soon, as Uber China has confirmed it completed a USD two billion Series B financing, boosting its pre-money valuation to USD seven billion. Didi Kuaidi closed USD three billion in financing last September and the company is now valued at USD 16.5 billion.

An analyst from China’s leading research group Analysys International warns that ride hailing companies can’t rely on discounts to attract users for too long because user loyalty is low. The quality of service is what matters more.

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