Three mainland cities released drafts of local guidelines to regulate car hailing businesses on Saturday, but mainland car hailing giant Didi Chuxing hit back saying that they would substantially reduce vehicle supply and increase operating costs.
According to the drafts issued in Beijing, Shanghai and Shenzhen, only drivers holding household residency in their respective cities and vehicles registered with local number plates would qualify for car-hailing services.
The rules feature a number of restrictions on vehicles’ wheelbases. Petrol-based cars should have a wheelbase of at least 2.7 metres while new energy cars must have a wheel base of more than 2.65 metres.
In Shanghai, drivers working for car-hailing apps must also be the car owners as the vehicles providing carpooling services must be registered with the local transport authority. Shenzhen includes the stipulation that cars must be less than two years old.
Didi said in a statement on Saturday that the measures were quantitative limitations in disguise, forcibly raising the bar to accessing car-hailing business platforms.
As a result, there would be a sharp drop in market supply of rideshare vehicles and significant drop in the number of rideshare drivers who could comply with the new rules.
“In Shanghai, for instance, less than 20 per cent of existing rideshare vehicles meet the proposed wheelbase requirements,” the company said. “Of more than 410,000 activated driver accounts in Shanghai, fewer than 10,000 are residents with Shanghai residency registration,” it added.
Didi warned that operating costs were bound to rise sharply if only high-end vehicles like the Volkswagen Passat or Audi A4L-level luxury sedans were admitted. In some cases, rideshare fares might rise to twice as much as comparable taxi fares, it said.
The development of the shared economy would also suffer, Didi said. “Many part-time drivers who joined the new economy in response to Premier Li Keqiang’s support for the sharing economy will also have to withdraw from the sector,” it said.
Since early last month, Didi passengers have faced higher charges for trips on the mainland after the company started raising prices and reducing cash subsidies for several services in many cities across the country, such as ride hailing and carpooling, following its Uber China buyout.
Beijing-based consultancy Analysys International predicted the size of the mainland’s ride-hailing market would reach at least 52 billion yuan (HK$60 billion) by 2018.