German automaker BMW Group becomes the first foreign carmaker to obtain a license for ride-hailing operations in China. The Group’s subsidiary BMW Mobility Service is set to begin its ride-hailing services in Chengdu – the capital city of China’s Sichuan province – on the 14th of December, months after its establishment in China early this year.
Essentially, this puts BMW on China’s map as one of the new entrants into the country’s competitive ride-hailing space, after the likes of Ctrip, and Meituan. Didi Chuxing has dominated China’s ride-hailing market since Uber’s exit in 2016. According to Bain & Co., Didi Chuxing accounted for 90% of China’s ride-hailing trips as of May 2018. China’s overall ride-hailing market stands at $23 billion and BMW wants a slice of it.
This might be an optimal time for BMW to foray into China’s ride-hailing space. Didi Chuxing is facing many challenges at the moment. Hit with two rape and murder cases over the short span of 3 months, Didi Hitch was suspended. The firm was forced to raise its safety threshold. Didi’s drivers have to clear strict facial recognition and safety exam before receiving orders.
It is also a fine example for traditional carmakers to embrace technology and make a move in the burgeoning sharing economy during the era of tech implementation today.
Other than this lucrative space, the ongoing Sino-US trade spat is also driving BMW to shift more of the production of its luxury cars to China. It recently increased its stake into Brilliance China Automotive Holdings Ltd from 50% to 75%. This will help to shield its profits from the negative effects of the trade war.
Editor: Ben Jiang