Volkswagen Group announced on Thursday it is in talks with China’s Didi Chuxing to set up a premium taxi-hailing service in China. The Volkswagen Didi Chuxing deal is the latest in the wave of tie-ups between automakers and technology seeking to profit from personal transportation service.
Didi Chuxing, often referred to as ‘Uber of China,’ it virtually owns 99 percent market share of China’s taxi-hailing market. By its own numbers, it owns 87 percent market share when it comes to hailing private cars. Didi Chuxing operates in over 400 cities, set against UberChina’s 45 cities.
Didi Chuxing isn’t just taxis and cars. It’s also offering services with buses as well as an option to book chauffeurs.
Didi Chuxing in Chinese, literally translates to “honk honk, commute.” Earlier, it was known as Didi Kuaidi, created by the 2015 merger between China’s two largest car-hailing apps, Didi Dache and Kuaidi Dache.
Volkswagen Didi Deal
The Volkswagen Didi Chuxing deal will help the German-automaker double down on the Chinese market. It is competing against General Motors for the title of the biggest-selling automaker in China. With Didi’s help, it can bank on long-term growth in the country where not a lot of people own a car.
Volkswagen is yet to elaborate further on its plans with Didi Chuxing. However, it seems that Volkswagen Didi deal will help the automaker cement position in the domestic market in the current year.
In a similar move, General Motors has tied up with Lyft. Meanwhile, Uber Technologies has forged a deal with Toyota Motor Corp. Globally, automakers aren’t just keen on developing vehicles, but also calling themselves ‘mobility’ companies that offer ride-hailing.
More Plans for Volkswagen Group
Volkswagen Group has ambitious plans to be the biggest player in the new energy vehicles market in China. By 2020, it is targeting annual sales of 400,000 and 1.5 million by 2025. This comes as Beijing lobbies automakers to sell low-emissions cars via friendly regulations and other incentives.
Volkswagen Group plans to deliver its first locally produced NEVs under the Audi brand this year. Audi AG manufactures the vehicles in a collaboration with China FAW Group.
Didi Chuxing has many backers, which includes Apple which invested $1 billion recently. It has also secured funding from Alibaba and Tencent, two of the largest internet giants in China.
Unlike other startups, fundraising has never been a problem for Didi. It has a valuation of over $20 billion, a figure up from $6 billion in February 2015.