- DiDi Chuxing is starting a price war with industry heavyweights Uber and Ola.
- The Chinese ride-sharing giant is the latecomer to the Australian market.
- It plans to cut fares and services fees in a bid to win over both drivers and consumers.
The battle for market share among ride-sharing companies in Australia looks set to escalate with DiDi Chuxing cutting fares, as well as its services fee in Melbourne.
The $50 billion Chinese giant, the world’s biggest transport platform, is a latecomer to the Australian market, having launched DiDi Express in Melbourne in June after initially trialling the service in Geelong a month earlier. It has yet to roll out nationally. Australia was its first western market.
While Uber was the pathfinder in the sector, Indian competitor Ola has spread to all Australian capitals since launching in Perth this year.
But DiDi appears to be starting a price war for drivers, slashing its commission from 20% to just 5% when the industry standard ranges between 15% to 27.5%.
DiDi’s new Melbourne pricing structure has a price per minute rate of $0.30 and a per km rate of $1.08, which drops to $0.98 after 7km. The base fare is $1.98. DiDi does not charge a booking fee.
The company claims a 33-minute, 24km trip from Melbourne Airport to the CBD’s Flinders Street will now cost around $37.20, excluding tolls, airport fees and other levies (the total cost is more likely around $44.50), with the driver making $34.47 of that figure. That cuts the base cost by around $6 while the driver makes $2 more than under the old regime.
When Business Insider looked at Uber for a similar trip, the quote was around $52, which includes around $7.30 in tolls. Ola’s quote was around $55, although the company has offered constant and varied personalised discounts to users ever since its launch – often around 10-15%, but up to 25% – so the discounted price matched DiDi’s.
Melbourne taxis estimate the cost at $67.
But there’s no doubt DiDi has deep pockets if it wants to start a fight in the already crowded Australian market, which also includes Estonian-based Taxify, GoCatch, India’s Ola, and the USA’s Uber.
The Beijing-based company claims it has 550 million users worldwide, with 31 million drivers operating in around 400 cities. It operates in China, Japan, Brazil and Mexico, as well as Melbourne, and has not yet revealed Australian expansion plans.
It’s unchallenged in China, having bought out Uber there in 2016.
And the business has hedged its bets with stakes in Ola and Taxify, as well as Singapore-based Grab and US service Lyft, as well as partnering with most of its rivals to cover 80% of the world’s population.
DiDi said it canvassed the views of more than 1,200 drivers in Melbourne, giving them four options on incentives, with nearly 62% choosing a flat 5% services fee as their preference.
DiDi’s Victorian state manager, Abigail Holman, said the new pricing structure and services fee was part of the company’s goal to make rideshare more affordable for both riders and viable for drivers.
The move comes after some Uber drivers held “strikes” earlier this year as part of an ongoing fight with the US ridesharing app over pay and claims of constantly changing conditions.
Holman argues the value proposition is missing for both users and drivers.
“Australia is one of the most expensive places to rideshare in the world; but unfortunately while riders have been paying, driver-partners have not seen this reflected in their earnings,” she said.
“After listening to feedback from our riders and driver-partners, we’re making a bold move to provide everyday value for riders while simultaneously increasing driver-partners’ earnings potential with a services fee that sees them earn 95% of fares.”