Mercedes is going after China's ride-hailing market

Wanna be driven around in a Mercedes-Benz S-class?The German brand's parent company, Daimler (...

Posted: Oct 25, 2018 10:44 AM
Updated: Oct 25, 2018 10:44 AM

Wanna be driven around in a Mercedes-Benz S-class?

The German brand's parent company, Daimler (DDAIF), certainly hopes so. It's teaming up with Chinese automaker Geely to launch an upscale ride-hailing service in China next year.

Companies

Daimler AG

Geely

Asia

China

Continents and regions

East Asia

Automotive industry

Business and industry sectors

Business, economy and trade

Automakers and manufacturing

Didi Chuxing

Mercedes-Benz

Like other established car manufacturers, the companies are trying to adapt to the upheaval technology is bringing to the industry's traditional business models. It's no longer enough to make and sell vehicles, especially as car sales are on the wane in key markets around the world, including China.

Daimler and Geely will jointly develop the software for their venture, which will be based in the eastern city of Hangzhou where the Chinese automaker's headquarters are located. The fleet will start out with Mercedes-Benz S, E and V-class cars. Geely's high-end electric cars may be added later on.

The ride-hailing service is the first prominent business tie-up between the two companies since Geely Chairman Li Shufu took a 10% stake in Daimler earlier this year.

"The development of such services, in which both companies already have a presence, forms part of our transformation from a vehicle manufacturer into a global automotive technology group," Geely President An Conghui said in a statement Wednesday.

Geely has a ride-hailing service in China, CaoCao, which uses the company's electric cars and mostly operates in smaller cities across the country. Daimler has made various moves into ride-hailing, including developing a joint venture with BMW, partnering with Uber on self-driving cars and investing in fast-growing startups.

China's tough market

The Daimler-Geely service will be entering a highly competitive field in China.

Didi Chuxing, the country's leading ride-hailing company, already offers a premier service with high-end vehicles. Didi is famous for driving Uber out of China after a protracted battle that cost the companies billions of dollars.

Didi accounts for some 90% of the ride-hailing market in China, but its reputation has suffered this year. The company is battling to win back users' trust after a female passenger was raped and murdered by a Didi driver in August, according to police, the second such killing this year.

Chinese consumers also often order rides through other apps, like Baidu Maps or payments platform Alipay, according to a recent report from market consulting firm Bain & Company. Working with a popular app could give a new ride-hailing service an edge over established rivals.

There's a strong incentive to enter the Chinese market. Bain says it's worth $30 billion, more than the rest of the world combined, and predicts it could more than double in size by 2020.

There are definitely opportunities for new players in the market, according to Bain partner Raymond Tsang.

If Geely and Daimler are just offering luxury cars, people can already get that with Didi. To win over customers in China, their ride-hailing service will need to be "truly unique and high-end ...They really have to differentiate themselves by service and reliability," Tsang said.

Some well positioned companies have struggled to make headway in the market.

Flush with venture capital money, online services company Meituan Dianping launched a ride-hailing service less than a year ago, hoping to take advantage of data from its delivery services and tap into its 290 million monthly active users.

But days before its IPO in September, Meituan executive Wang Huiwen said the company would be rethinking its approach to the business, which often requires burning a lot of cash to gain customers.

"Right now, our assessment of the ride-hailing business is we will not continue to expand," he said.

Huntsville
Scattered Clouds
89° wxIcon
Hi: 91° Lo: 68°
Feels Like: 92°
Florence
Few Clouds
88° wxIcon
Hi: 91° Lo: 69°
Feels Like: 92°
Fayetteville
Scattered Clouds
88° wxIcon
Hi: 91° Lo: 67°
Feels Like: 88°
Decatur
Few Clouds
85° wxIcon
Hi: 91° Lo: 67°
Feels Like: 89°
Scottsboro
Scattered Clouds
90° wxIcon
Hi: 87° Lo: 66°
Feels Like: 95°
WAAY Radar
WAAY WAAY-TV Cam
WAAY Temperatures

Alabama Coronavirus Cases

Confirmed Cases: 56441

Reported Deaths: 1136
CountyConfirmedDeaths
Jefferson7012170
Mobile5061140
Montgomery4599112
Tuscaloosa274353
Madison25359
Marshall205012
Shelby176425
Lee164737
Morgan13975
Baldwin134111
Walker111332
Elmore107622
Etowah106914
Dallas10189
DeKalb10017
Franklin95016
Unassigned77728
Autauga71515
Russell7130
Chambers68530
Cullman6686
Limestone6653
Butler65529
Houston6417
Tallapoosa63069
Lauderdale6006
St. Clair5983
Calhoun5545
Colbert5286
Escambia5128
Lowndes49222
Pike4805
Jackson4422
Coffee4364
Covington43512
Talladega4177
Dale4061
Barbour4022
Bullock37810
Hale36323
Marengo36111
Chilton3452
Blount3311
Clarke3236
Wilcox3158
Marion30914
Winston3095
Sumter29713
Pickens2786
Randolph2759
Monroe2683
Perry2552
Conecuh2388
Bibb2271
Macon2229
Choctaw22012
Greene2009
Henry1573
Washington1529
Lawrence1460
Crenshaw1343
Cherokee1317
Geneva1010
Fayette901
Clay892
Lamar891
Coosa671
Cleburne481
Out of AL00

Tennessee Coronavirus Cases

Confirmed Cases: 65274

Reported Deaths: 749
CountyConfirmedDeaths
Shelby14163224
Davidson13976146
Rutherford375539
Hamilton353538
Sumner204056
Williamson193916
Knox171710
Out of TN166012
Trousdale15105
Wilson126117
Putnam10817
Unassigned10772
Bradley10104
Robertson97313
Sevier9244
Montgomery8247
Tipton7177
Lake6960
Macon6467
Bledsoe6311
Bedford6309
Hamblen5084
Maury4993
Hardeman4444
Madison3842
Fayette3805
Rhea3500
Blount3483
Loudon3312
Dyer3023
McMinn29319
Cheatham2873
Dickson2820
Washington2760
Lawrence2506
Sullivan2485
Cumberland2294
Anderson2112
Gibson2031
Jefferson1931
Lauderdale1934
Smith1852
Warren1590
Greene1572
Monroe1566
Coffee1520
Cocke1460
Haywood1413
Hardin1407
Obion1273
Marshall1232
Wayne1230
Franklin1223
Giles1221
McNairy1171
Hickman1120
Carter1082
Marion1014
DeKalb990
Hawkins952
Lincoln950
White933
Roane880
Henderson830
Chester810
Overton791
Weakley791
Claiborne760
Campbell721
Grundy672
Crockett653
Unicoi600
Grainger590
Cannon580
Carroll571
Polk570
Henry540
Sequatchie520
Jackson500
Johnson490
Humphreys482
Perry430
Meigs400
Decatur350
Morgan341
Fentress290
Scott290
Union280
Stewart270
Clay230
Houston230
Moore230
Benton161
Hancock120
Lewis120
Van Buren90
Pickett80

 

 

Community Events