Serving the World's Largest Emerging Automobile Market
Home > Commentary > New regulation on car hailing services to boost sharing economy

New regulation on car hailing services to boost sharing economy

First, it was the release of new regulation on July 28 to offer legitimacy for car hailing services. Then, it was Didi Chuxing’s acquisition of Uber China on August 1. These events may quite likely to boost the industry that has operated in a grey area and further nurture the sharing economy. 

There are some noticeable changes in the world’s first nationwide online ride-booking regulation compared with its exposure draft.

First, the industry is finally legalized. There are quite a large number of private cars registered on car hailing service platforms to provide paid rides. Such practices are prohibited in the past with car owners facing severe fines or even their cars getting confiscated. Under the new regulation, both taxi drivers and private car owners can go into ride sharing after meeting some legal liabilities and requirements. In the draft, eight years are set for mandatory auto scrap, now the vehicles can serve up to 600,000 km before being forced out of operations.

It also requires that online ride-booking platform cannot operate with below market prices.

Though largely a guidance and details on management are still to be decided by local governments, the new regulation will definitely bring changes. Commuting services would become even more convenient and diversified.

For individuals, as long as one gets a driver’s license, he or she may earn a living by providing ridesharing either with his or her own car or rental cars.

Together with other forms like customized shuttles, hourly car rental, car sharing and carpooling prompts convenient mobility.

Maybe to echo the new policy and end the bitter subsidy wars, Didi Chuxing and Uber decided to combine forces.

When the acquisition finishes, a giant company with a market value estimated at $35 billion will have over 90 percent of the ride hailing market.

The new monopoly no doubt pressures smaller industry players like Yidao and Shenzhou Zhuanche, as well as customers, but the commuting market is too big to monopolize and needs joint efforts to be tapped further. Currently, most of them compete in tier-1 or 2 cities. 

Didi provides roughly 16 million rides daily, while “comparing with the 800 million urban population, Didi’s penetration rate is a mere 1 percent,” said its president Jean Liu.

Car hailing and ridesharing has grown quickly in several years from scratch to its current scale in China. With the release of the prospective policy and reorganization of the car hailing service industry, the head aching problem of traffic congestion may be alleviated.

| | | | | | |

Leave a Reply