Chinese ride-sharing app Didi Chuxing is adding a new business model: car rental service.
The company today launched its own online car rental business through an asset-light model in cooperation with existing leasing firms. Financial terms of Didi's deal were not released.
In 2015, 58.5% or 2.34 billion of China's 4 billion domestic tourist trips were completed in rental cars. The number is expected to surpass 5. 8 billion by 2020 according to estimates by the China Tourism Automobile and Cruise Association. According to Roland Berger Strategy Consultants, the value of China's short-term car rental market will grow from CNY6 billion in 2013 to CNY18 billion in 2018 at a CAGR of 27% much higher than the growth pace in the United States, Japan and other developed markets.
Rather than owning cars, Didi Car Rental works with car rental and leasing companies in an asset-light, high-efficiency sharing-economy model. Our data-driven rider-vehicle matching system and economy-of-scale advantages will help our partners improve their operational efficiency, reduce operations costs, and better organize under-utilized social resources to meet travelers' dynamic demand.
Didi Car Rental has been in beta testing since July in Shanghai, and plans to expand to more tier-1 and 2 cities by H1 2017.
A few weeks ago, U.S.-based Uber decided to exchange its local Chinese operations for a 20% stake in Didi Chuxing, and then Didi invested USD1 billion in Uber at a USD68 billion valuation. This deal made Uber the biggest shareholder in Didi.