After last year's wildly successful (and significantly money losing) taxi subsidy / discount campaign, the two largest taxi hailing services Didi and Kuaidi Dache are now offering ride subsidies of over 1 billion yuan ($161.2 million) to fight off both domestic and increasingly foreign competiton. The Alibaba-backed Didi Dache provides the coupon in 30 cities, while Tencent's Kuaidi Dache offers it in 46. Each user can enjoy two coupons per day.
This round of huge investment targets to increase the user stickiness to Didi Kuaidi Dache app and to cultivate user’s habit of experiencing and hailing premium cars as transportation in long term. However, whether the large-scale money burning campaign would help to expand the market is still in question since the 15 RMB coupon may not be so attractive to actual long term premium car users. Many premium car coupon users would likely switch back to taxis when the subsidy ends. Thus precise marketing should be carried out targeting on actual premium car user.
What’s next?
It seems that car hailing apps have ambitions to create a one-stop platform to integrate all kinds of transportation services, which includes taxi hailing, premium cars, car-pooling, designated drivers and express service. The eventual goal is for clients to be able to hail a taxi with the app within 3 minutes with a daily usage goal of 30 million trips. Diversification into the premium car category will emerge to gradually transform taxi user to premium car user with entry level, premium and high-end service options.
