China: Uber, Didi could lose thousands of drivers as new regulations come in
RIDE-hailing giants Uber and Didi Chuxing could be facing a major driver shortage in the coming months as three major Chinese cities issued draft municipal regulations for the ride-hailing industry over the weekend.
Shanghai, Shenzhen, and Beijing proposed imposing restrictions on who will be allowed to work for the ride-hailing companies, making it more difficult to recruit drivers.
According to Reuters, the transport commission of Beijing suggested that drivers should be required to have local household registration – effectively banning migrants from outside the cities from gaining licenses to operate cars under Uber or Didi.
Didi said in a response on its social media channel, Weibo, that the new regulations will result in a sharp drop in market supply of vehicles for consumers to request. They said that in Shanghai alone, fewer than 10,000 of the 410,000 current drivers operating under Didi meet the draft proposal requirements.
In addition, the city also wants only locally-registered vehicles to be used by the ride-hailing companies, and to impose an age limit for drivers. Tech in Asia also reports the regulations including a minimum engine size, which will rule out small- and mid-sized cars currently being used.
Didi, which bought Uber Technologies Inc.’s Chinese branch in August this year, added that the new regulations would amount to doubling fares for rides offered in the three cities.
— Billee Howard (@MashupTweet) October 10, 2016
“App-based rideshare becomes affordable thanks to the high cost efficiency of privately-owned vehicles,” said Didi, as quoted by TiA. “Operating costs are bound to rise sharply if only [Volkswagen] Passat or Audi A4L-level luxury sedans are allowed. In some cases, rideshare fares might rise to twice as much as comparable taxi fares.”
Liu Xiaoming, vice minister of transport, said the ride-hailing industry should come up with a “differentiated” service with improved quality after the regulations were announced, and should not compete directly with taxi drivers.
According to Caixin Online, the state-owned Dazhong Transportation Group Co. Ltd. – the main provider of taxi services in China – welcomed the proposals, which come just two months after Didi and Uber services were legalized in the country.