Car-Hailing at Crossroads

The "Internet+" concept has played a key role in optimizing and integrating the allocation of social resources, and has led to the evolution of economic reform. Many vertical industries have achieved deep integration with the internet, developing new business models as a result. There is no doubt the car-hailing service concept is the most eye catching of these.

From 2012, in just a few years, the business model of car-hailing services has begun to return to rationality after intense public curiosity and platforms' money-burning financing activities. It has gradually developed into a relatively new yet mature model of shared mobility. With the growth of the macro economy and acceleration of urbanization, improved infrastructure and policy guidance, as well as changes in people's travel demands and preferences, the car-hailing market in China will continue to grow.

Car-hailing vehicles are essentially non-loitering taxis, and overall management should follow the principle of "total volume control", according to Deloitte China's Car Hailing at a Crossroads. Government policy is the vital driving force behind the growth of the car-hailing market. Major platforms have volved from a C2C business model to a hybrid C2C+B2C one. Core competitiveness has shifted from being "user traffic-oriented" to a dual focus on "user traffic and regulation compliant transportation capacity".

From a value chain perspective, the future direction of the car-hailing market is towards “platformization”. In particular, car-hailing companies that are backed by car rental/retail dealerships or vehicle manufacturers favor an asset-light investment model and aim to expand their business models based on user data.

From an economic and environmental protection perspective, the transportation capacity of car-hailing will gradually be replaced by new energy vehicles with lower energy consumption. The trend of utilizing and deploying “new energy vehicles” is inevitable.

In addition, with the introduction and commercialization of autonomous driving technologies in shared mobility, the car-hailing market will embrace disruptive innovations and revolutions. The process of becoming "intelligent" is irreversible and inevitable. In the future, those who master core autonomous driving technology will be able to occupy and dominate the sector.

The car-hailing market in China has formed gradually. The cost-effective express car market, which meets daily commuting demand, and high priced premium car market, which meets high-end business travel demand, have attracted several participants. In the future, there will be magnates like DiDi and as well as small, beautiful platforms that compete in various segments of the market. The competitive landscape of "one superpower and several weak players" will remain in place.

Car-haling is a snapshot of the development of the overall auto and mobility market. Platformization, the shift to new energy and intelligence are the three trends that are key to its future. With key technologies, infrastructure readiness and sustainable business models, the car-haling market will enter a new era with fantastic opportunities.