German luxury car manufacturer BMW will make history this December, when it becomes the first foreign carmaker to provide a ride-hailing service in China, according to Reuters. The automotive firm was recently granted a license to operate a ride-hailing service in Chengdu, becoming the first and only international automaker to enter the USD23 billion industry so far. BMW Group has assigned its fully-owned subsidiary, BMW Mobility Service Ltd., to the task of operating the service in Sichuan’s capital.
Despite being the first to be granted a license to operate a ride-hailing service in the country, BMW is not alone in its interest in the Chinese market. Daimler AG stated last month that it is in the process of establishing a ride-hailing venture with Zhejiang Geely Holding Group Co.
Didi, for their part, are likely not too concerned about the new player in the Chengdu market – as this is not the first time the company has faced international competition. Didi Chuxing outlasted Uber’s efforts to enter the Chinese ride-hailing market in 2014, and succeeded in acquiring Uber China in 2016 for USD35 million.
That being said, Didi’s dominant market position in China does not make them invulnerable to the entrance of new, high-profile competition. If partnerships between BMW or Daimler with digital payment platforms such as WeChat Pay or Alipay come to fruition, then Didi may find they lose a bit of their competitive edge.
At present, a staggering 90 percent of all Chinese ride-hailing trips are facilitated through Didi, according to a Bain & Company report released in May, and the market is expected to grow over USD30 billion by 2020.
[Image via Pixabay]
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