Chinese ride-hailing giant Didi Chuxing is gearing up for another costly price war by reintroducing subsidies for drivers, Caixin reports.
The company has quietly introduced a special membership card scheme in seven cities, including Shanghai and Beijing, where drivers holding the card will be able to receive extra monthly pay, a subsidy in all but name, sources told Caixin.
Didi’s move appears to be aimed at preventing its drivers from abandoning the company for a new wave of rivals entering the market, the most formidable of which is tech giant Meituan-Dianping, famous for its restaurant and food delivery apps. Meituan-Dianping launched a ride-hailing service in Nanjing last February and is set to expand into Beijing, Shanghai and five further cities in 2018.
Meituan plans to offer huge subsidies to users and take only an 8% commission from drivers, much lower than Didi’s 20%. This has allowed Meituan to build up “a relatively stable user base” in Nanjing, a source close to Didi told Caixin.