Chinese ride-hailing major Didi Chuxing announced an upgrade of its auto solutions platform to Xiaoju Automobile Solution in a development that will see it invest $1b in the spin-off in a bid to provide Chinese car owners convenient, flexible, reliable and economical one-stop automotive services.
According to details released by Didi Chuxing, Kevin Chen, a former General Manager (GM) of the former auto solutions platform, will be the GM of Xiaoju Automobile Solution and will be reporting to the President of Didi Chuxing, Jean Liu.
The spin-off was reported by Reuters earlier in July ahead of a proposed public listing, with the company planning to raise between $1b to $1.5b in the transaction and had tapped SoftBank Group to facilitate the deal. Mainly involved in car rental and maintenance services, it also provides drivers with optimised gas station deals and is reportedly valued by Didi at between $2b and $3b.
The auto solutions platform was incubated in 2015 and has been on trial since April 2018, prior to its spin-off into an autonomous organization. This move will see the add-ons such as Xiaoju Auto Leasing & Retail, Xiaoju Gas Refueling, and Xiaoju Auto Care to improve car-related services.
Currently, Xiaoju operates in 257 cities in a network of 7,500 partners and distributors, with its core services being Xiaoju Auto Leasing & Retail, Xiaoju Gas Refueling, Xiaoju Auto Care, and Didi Car Sharing.
”The creation of Xiaoju Automobile Solutions is not only a key step towards achieving Didi’s automobile alliance strategy but also a milestone in organizational innovation as we continue to expand our business horizon,” says Cheng Wei, the founder and CEO of Didi Chuxing, at a time when the ride-hailing sector has seen much fierce competition since Uber’s departure.
Meitan-Dianping, a Chinese O2O platform giant, and Ctrip, Chinese OTA giant, have both expanded into the ride-hailing space. Additionally, in July three Chinese automotive majors merged into a single entity called T3 with the aim of consolidating and expanding into autonomous vehicle technologies.
Recent months have seen Didi Chuxing seek joint acquisition of bicycle sharing firm Ofo with Alibaba-backed Ant Financial, as well as the recent release of additional safety features, and the establishment of a joint venture with Softbank amid a more competitive business environment.
Didi is seeking to grow its ecosystem and offer more value-added service even as archrival Meituan-Dianping is in the midst of preparing for an upcoming IPO in Hong Kong.
Editor: Shiwen Yap