On-demand Taxi Market in China 2021-2026

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    ON-DEMAND TAXI MARKET IN CHINA

     

    KEY FINDINGS

    • Dingding Yueche, established by Panda Automobile trade in Shanghai, has speculated to receive an investment of approximately $743 million through the Everbright Bank in China.
    • Didi Global partnered with GAC group to develop self-driving EVs for the taxi business.
    • Didi has started to develop autonomous robo taxi with Volvo cars and started the trial fleet in Shanghai in June 2020.
    • Didi has signed up with more than 12 OEMs to procure upto 1M battery powered cars in next two years
    • Didi raised $4.4 billion in the first IPO based with investors in the US.
    • Didi has also started operations in countries across the globe such as Mexico, Costa Rica, Australia, Japan and many others.
    • The  service provider of the taxi-hailing business Caocao closed the latest deal with an amount of $440 million with three investors for the Series B.
    • The company announced use of the electric powered taxi to be produced by the Geely subsidiary of London EV company, with services offered in Paris
    • To improve passenger safety, Shouqi Limousine & Chauffeur (SQLC) launched the Car Intelligence system (CI) in April 2018.
    • The global market for taxi and cab services which was estimated at a value of $XX billion in the year 2020, is set to grow by the CAGR of XX% over the period of seven years.

     

    INTRODUCTION

    China is world`s biggest automotive market since 2010, with more than 24.2 million new cars sold in 2017.But, still the car ownership per capita in China is way lower than US and Europe.

    The coastal cities of China are extremely wealthy and the car ownership in those tier-1 cities is 300+ per 1000 inhabitants, more than double the national average.

     

    Info Graphic: On-demand taxi market in China

    The on-demand taxi operators typically target cities with 2M+ population and there are more than 250 cities in China with that much population. It is also expected that by 2023, the consumption growth of tier-3 and tier-4 cities will surpass that of tier-1 and tier-2 cities.

     

    As of July 2021, China is estimated to have close to 1B internet users, which is more than thrice the US population. Almost 97% of them access internet from their smartphones

     

    MARKET DYNAMICS

    Dingding Yueche is a taxi and car pooling rental company established by the Panda Automobile Trade in Shanghai. The company offers many transportation services such as on-demand taxi, ride-sharing, private cab, chauffeuring and buses in cities across China. The Everbright Bank in China is speculated to invest $743 million in the company through its financial leasing arm.

     

    The company Didi global has undertaken different ventures such as partnering up with the GAC group to develop and produce self-driving EVs to be incorporated in the cab and taxi business. With the company expanding to other countries, they have started to develop future strategies.

    • They have started to develop autonomous driving teams with Volvo Cars for their self-driven fleet test in Guangzhou.
    • Due to the pandemic, the company developed the first of its kind AI detection technology for mask wearing in taxis with an accuracy rate of 98%.
    • The company started its on-demand robo taxi service in Shanghai in June 2020. The ride covers areas around Shanghai’s Automobile exhibition center, subway stations, local business districts and the hotels downtown.

     

    Till 2016, all on-demand taxi operators in China were burning a significant amount of cash on driver incentives and subsidizing the rides.

     

    Also, in 2016, more than 20 cities including Beijing and Shanghai introduced laws which required local drivers and local number plates. Now, almost all cities have mandated taxi companies to employ only local drivers with credible history.

     

    The operators are now offering premium experience in their tides to differentiate themselves in the crowded on-demand taxi market in China. In terms of AI technology, Caocao Car will work with Volvo(Geely) in self-driving cars and Terrafugia(also owned by Geely) in flying cars.

     

    Like other global markets, China is also facing security concerns related to female riders. To improve passenger safety, Shouqi Limousine & Chauffeur (SQLC) launched the Car Intelligence system (CI) in April 2018. It will notify if there is any untoward activity with the passenger. 

     

    The on-demand taxi market in China is also moving towards new energy-based mobility. Didi has signed up with more than 12 OEMs to procure upto 1M battery powered cars in next two years. Caocao(Geely backed taxi operator) now operates in more than 25 cities across China with 18,000 Geely branded EVs. It also offers business rides and intra city packages. 

     

    MARKET SIZE AND FORECAST

    The number of on-demand taxi users reached ~430M in 2021. Didi Chuxing claims to have 32M drivers on its platform but less than 5% actually have an on-demand taxi license.

     

    Unlike the US, China doesn’t allow private car owners to book rides via on-demand taxi apps.

     

    The market size of on-demand taxi market in China was $XX B in 2020, growing at –% CAGR till 2026

     

    The company Didi Global raised approximately $4.4 billion in the US with the help of investors, making it one of the largest initial public offering deals in the decade. They had 493 million active users from which more than 75% are from China. However, after the IPO sanction deal, the company closed 20% above their offered price of $14 but it was less by a margin of 10% due to the cybersecurity investigation currently focused on the company planning to eliminate the application from app stores in China.

     

    The company Caocao Zhuanche is the service provider of the taxi-hailing business. It offers business and taxi rides as well as intracity goods delivery through their own drivers. The company closed the latest deal with an amount of $440 million with three investors for the Series B. The company has more than 4.75 million active users monthly with Shou Qi, another taxi service company having 2.69 million active users. Caocao’s active users are daily requesting over 1.65 million vehicles per day out of which 630,000 requests are received daily with 540,000 rides completed.

     

    COVID-19 IMPACT

    In recent times, the taxi, cab and car sharing services have gained much popularity due to positive factors such as the green benefits with carbon emissions, traffic congestion and reduced travel costs. Due to the pandemic the market plummeted as lockdowns were imposed and people feared using public means to travel. As the lockdowns were lifted, people tried to use private vehicles in order to risk contamination which is negatively impacting this market.

     

    However, the post-pandemic reports suggest a steady growth in the taxi market due to several features and services adopted by the companies such as:

    • Partitions to distance the passengers and drivers.
    • Vehicles equipped with sanitizers and sanitisation after every ride.
    • Installation of temperature check thermometers to eliminate the entry of passengers and further transmission.

     

    According to a report by the Ministry of Transport of China, the number of taxis in China in 2019 were about 1.39 million and made approximately 34.8 billion trips. These trips accounted for about 27% of the urban passenger traffic. Before the start of the pandemic the number of cabs booked with ride-hailing platforms were 15% but that increased to an unprecedented rise of 29% in the month of February 2020.

     

    Due to the COVID-19 pandemic, the global market for taxi and cab services which was estimated at value of $XX billion in the year 2020, is set to grow by the CAGR of XX% over the period of six years. China being the world’s second biggest economy is estimated to grow by the CAGR of XX%, being the fastest growing country in this sector.

     

    COMPETITIVE LANDSCAPE

    The competitive landscape of the on-demand taxi market in China is highly concentrated and fiercely competitive. Didi Chuxing is the undisputed market leader with more than 85% market share. It has always faced stiff competition from Uber earlier and now from Meituan Dianping, DiDa,and CaoCao. 

     

    In the year 2020, Didi Chuxing the key player accounted for the maximum market share in the market as compared to other Asia-Pacific competitors. It is the most widely used cab service in the Chinese market. It also started launching trials of the self-driven technology following Uber’s strategy in Shanghai, China during June 2020. The company has also started operations in countries across the globe such as Mexico, Costa Rica, Australia, Japan and many others. It has completed a fundraising round with a value of over $500 million by the SoftBank Vision Fund 2 for the company’s autonomous driving subsidiary.

     

    The company Didi recently launched its three year strategic goals list abbreviated as “0188”. By the year 2022, the company aims to achieve the penetration rate of about 8% in the mobility market with more than 100 million trips daily and serve approximately 800 million active users monthly across the globe.

     

    Caocao Zhuanche, a taxi and chauffeur hailing company announced the use of the electric powered taxi to be produced by the Geely subsidiary of London EV company. The company has offered services in Paris by the end of 2020, as the automotive sector is shifting towards electric powered vehicles.

     

    Alibaba has been strengthening its position in this market. It already owns ~6% stake in Didi Chuxing but it wants to take advantage of the sheer size of this industry by its mobile payment service, Alipay. Again, looking at the sheer size, we expect many more new entrants in this market, Daimler has already announced its plans in Oct `18 to launch its on-demand taxi services.

     

    Like the on-demand taxi market in the US and India, the market players are expanding to other transportation modes like bike-sharing, car sharing and integration with public transit.

     

    COMPANY PROFILES

    1. Tiantian Yongche
    2. Meituan Dianping
    3. Didi Chuxing
    4. Caocao Zhuanche
    5. DiDaChuxing
    6. Ucar Inc
    7. Shouqi Limousine & Chauffeur
    Sl no Topic
    1 Market Segmentation
    2 Scope of the report
    3 Abbreviations
    4 Research Methodology
    5 Executive Summary
    6 Introduction
    7 Insights from Industry stakeholders
    8 Cost breakdown of Product by sub-components and average profit margin
    9 Disruptive innovation in the Industry
    10 Technology trends in the Industry
    11 Consumer trends in the industry
    12 Recent Production Milestones
    13 Component Manufacturing in US, EU and China
    14 COVID-19 impact on overall market
    15 COVID-19 impact on Production of components
    16 COVID-19 impact on Point of sale
    17 Market Segmentation, Dynamics and Forecast by Geography, 2021-2026
    18 Market Segmentation, Dynamics and Forecast by Product Type, 2021-2026
    19 Market Segmentation, Dynamics and Forecast by Application, 2021-2026
    20 Market Segmentation, Dynamics and Forecast by End use, 2021-2026
    21 Product installation rate by OEM, 2021
    22 Incline/Decline in Average B-2-B selling price in past 5 years
    23 Competition from substitute products
    24 Gross margin and average profitability of suppliers
    25 New product development in past 12 months
    26 M&A in past 12 months
    27 Growth strategy of leading players
    28 Market share of vendors, 2021
    29 Company Profiles
    30 Unmet needs and opportunity for new suppliers
    31 Conclusion
    32 Appendix
     
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