The ride-hailing giant in China, Didi Chuxing, has waged war once again with Uber, this time in Uber-dominated Mexico. It publicly announced its arrival with a website advertising its services to both drivers and passengers. We could potentially see another billion dollar face-off.
Didi Chuxing’s global expansion outside of Mainland China has always been to form strategic partnerships with local companies, like their strategic investment in 99, Brazil’s largest local shared mobility provider, and Taxify, a leading ridesharing company in Europe and Africa.
These were wise moves as Didi was able to gain relevant information on the local market with these partnerships. It would be interesting to see how Didi tackles the Latin American ride-hailing market, and how it will shape its business model, the business model that chased Uber out of China, to conform to the Latin American culture.
Didi Chuxing will first launch in Toluca de Lerdo, while its operations hub is located in the Juarez neighborhood of Mexico City. Toluca is currently the fifth largest urban area of Mexico, 63 kilometers west south-west of Mexico’s capital, Mexico City.
Didi is pulling out all the stops to gain a piece of the market from its competitors. It is scurrying to recruit drivers by promising higher earning than what its competitors have to offer and bonuses to rope in other drivers and passengers. The will also take no cut of the fare till June 17, and from there on claim 20% of the fare, 5% lower than the commission Uber charges.
Didi’s plans for their entrance beyond Asia into the Latin American realm was reported last year in December by Reuters. Now, as they execute the said plans, they will help develop Mexico’s underdeveloped transport system, and hopefully provide a new addition to the local’s transportation choices.
“Didi’s advanced AI and big data technologies, developed from dealing with the world’s most complicated transportation systems, and its intensive experience in managing the world’s largest ride-hailing fleet will be committed to bringing convenient, safe and affordable mobility options to broader users and communities in Mexico,” said a spokesperson to KrAsia.
Latin America ranks the third in the ride-hailing market, trailing behind the United States and China. Narrowing it further down to Mexico, Mexico is home to 70 million internet user, 63% of its population; and more than 90% of them connect through a smartphone. With the ginormous market of ride-hailing married with Mexico’s high levels of smartphone usage, it is very likely for ride-hailers, through concerted contribution and of course competition, to establish a ripe market for ride-hailing with mammoth potential in Mexico.
Even with Uber’s presence already flourishing in Mexico, a spokesperson from Didi Chuxing told KrAsia that, “The [ride-hailing] market is way from saturated, and we are glad to see the local market is not only welcoming to more services, but they also understand how beneficial completion in the region is for the final user.”
As Didi now adjusts their organizational structure to fit into Mexico, to be more localized and efficient, their aim for now is to focus on improving user experience and safety.
While doing that, they will constantly feed on the local communities’ opinions to improve their service for them, as said by the same spokesperson to KrAsia.
Didi’s main competitor in Mexico, Uber, has currently 87% of the market share in ride-hailing in August as per Reuters.
Uber will be in for another fierce competition, after losing to Didi in the bleeding battle in the Chinese ride-hailing market, to a buyout from Grab in the Southeast Asian market.
Uber was facing uphill battles waged by ferocious challengers which were closer to their home market and knew the market better.
Where safety is concerned, Uber has a share my trip function to let family and friends know of the user’s whereabouts and trip status.
As for Didi, it is stepping up its game with safety functions to make to make both drivers and riders feel safe during the ride. According to our spokesperson from Didi, they have installed an SOS button on the app. By clicking it, it would send your exact location to your emergency contacts and your phone would start audio-recording of what is going on in the car. Didi is continuing to device more safety features as it progresses.
In a separate note, Didi keeps piling up its war chest to support upcoming wars home and abroad as South Korean Mirae Asset Financial Group plans to set up a private equity fund worth 280 billion Korean won (approximately US$260 million) to invest in Didi Chuxing. The Korean financier seeks to acquire a 0.5 percent stake in Didi.