Ride-hailing company Didi Kuaidi, the Chinese front of an anti-Uber Technologies alliance, says it is seeing better than expected results from its September investment in Lyft, Uber’s main rival on its US home turf.
“The strategic partnership we’ve built has been actually more successful than we anticipated from the beginning,” says Didi’s Stephen Zhu, vice president of strategy.
“Ever since we invested in Lyft, their market share has grown so much,” adds Zhu, without giving exact figures.
However, earlier this month, Lyft told Reuters it expects to reach US$1bil in gross annual revenue.
Didi, backed by Chinese tech behemoths Tencent Holdings Ltd and Alibaba Group Holding Ltd, is locked in a battle in China with US rival Uber. Along with Lyft, Didi has also taken stakes in ride-hailing apps GrabTaxi in South-East Asia and Ola in India, where each one of these companies also competes with Uber, now valued at around US$51bil.
Behind each of these firms, bar Lyft, there is another common backer: Japan’s SoftBank Group Corp.
Didi’s battle with Uber in China has been especially brutal, with each firm burning through more than US$1bil, much of it on subsidised discounts in an effort to lure in hordes of customers.
“We spent money because there was a competitor there spending money irrationally,” explains Zhu, who declines to name the competitor or say how much Didi spent. But he did say that its subsidies are much lower than the competitor’s and that its market share has increased in China.
“Our competitor is definitely not in great shape,” he says, “because it is fighting a major global war.”
Zhu points to the rival’s heavy spending in emerging markets, like the home bases of Didi, GrabTaxi and Ola, and its lack of market share there.
Uber has previously accused its rival of spending wastefully.
A China-based Uber spokeswoman says Uber has “significantly greater city coverage and market share” in the US than Lyft, operates in 66 countries, and has not been “distracted” by gaming, designated drivers and buses, all areas in which Didi operates.
In September, Uber says it would enter 100 new cities in China over 12 months. Additionally, the firm is going to “at least double or triple our current headcount in China”, the spokeswoman says.
Didi is not currently profitable, though it says it’s breaking even in more than 100 cities. For Zhu, the issue of monetisation is mainly one that lies two to three years down the road.
Didi says it plans to offer its private car service in 400 cities in China by February, compared with the 259 cities it currently serves.
“There will be a time that people will find by spending money you will not be able to buy market share,” said Zhu. “There will be an inflection point.” — Reuters