Didi struggles in Shanghai: Operating without a license, driver arrested, warned of a ban or even internet access cut

Quality issues with vehicles and drivers persist.

Photo:Shutterstock.com

There are 29 legally operating ride-hailing platforms including Meituan in Shanghai, which has had detailed regulations in place since 2016, including requirements like vehicle registration and in-car emergency call buttons to summon police. China’s largest ride-hailing platform, Didi Chuxing, is not among them, even though the company has been providing rides in Shanghai for years.

The Shanghai Municipal Transportation Commission has periodically visited Didi’s Shanghai offices. It has issued fines and asked Didi to remove vehicles that do not meet the city’s regulations from its platform.

Didi has a track record of quickly fulfilling the financial penalties, but has not removed the problematic vehicles as requested. Tension between the company and local regulators has been escalating.

“Surprisingly, Didi is still sending orders for unqualified vehicles after being fined RMB 5.5 million (USD 782,700),” the transportation commission said on Tuesday in a WeChat post. “Since June 14, Didi has turned a deaf ear to the request to clear these unqualified vehicles.”

At the moment, 82% of the commission’s blacklisted vehicles are listed on Didi, while Meituan hosts 15% of the cars under scrutiny.

The local transportation regulator warned Didi, as well as other platforms including Meituan, that it could request internet regulators to punish repeat violators by banning new downloads of their apps or even severing the internet connections of these companies’ servers.

One day after issuing this stern warning, the commission said on its WeChat account that a driver surnamed Li, who operated an unqualified car through Didi, will be held in custody for 20 days.

On August 7, Li was apprehended by the commission’s law enforcement officials when transporting a passenger for RMB 20.

At first, Li refused to answer questions posed by these officials and even tried to bribe them. Before his traffic ticket was processed, Li drove away in reverse, cruising through red lights without stopping, posing a danger to normal traffic. This was the second time that Li was found to be operating in violation of the commission’s regulations since November 2016.

Li is not an isolated example. On June 14, on its Weibo account, Didi confirmed an incident in which one of its drivers lost control of his vehicle as he attempted to evade officials dispatched by regulators, injuring several people. According to a Chinese media report, this driver was operating an unqualified vehicle that did not meet the regulator’s criteria.

When contacted by KrASIA on Thursday, Didi said that it is actively communicating with the regulators and will continuously carry out compliance work for its ride-hailing business.

Behind Didi’s struggles in Shanghai is the drivers’ unwillingness to make changes to their vehicles, as well as an insufficient number of drivers and vehicles to meet consumer demand.

If a driver registers his vehicle as one for business purposes rather than personal transportation, higher insurance premiums kick in, and the vehicle is legally required to be scrapped after running for 600,000 kilometers or eight years. Private vehicles, on the other hand, have no such limit.

“If unqualified drivers and vehicles are completely removed, Didi’s transportation capacity will drop off a cliff,” an analyst told 36Kr, adding that without the cleanup, there will always be hidden safety risks.

36Kr is KrASIA’s parent company.