The largest Chinese ride-hailer Didi Chuxing is reportedly purchasing over one million second-hand vehicles from auto trading platform Renrenche.com, one of its investees, over the following 3 years, highlighting a step further towards a heavy-asset operations model which comes as part of Didi’s plan to become the future generations car-sharing operator.
Didi Chuxing has made a strategic investment worth USD200 million in the Beijing-based startup in last September. The latter has been seeing fast pace growth since then as a result of their subsequent cooperation on multiple fronts including product, data and operations.
According to Renrenche.com, the company’s trading volume grows at 40% continuous growth over the three months period in Q4 2017, speaking to the fastest growth in Chinese online auto trading sector.
The investment boosted Renrenche.com’s fleet inventory into which Didi is tapping now.
It’s a common practice for ride-hailers to tap into drivers who bring their own vehicles to ride-hailing platforms and make use of their spare time in exchange for some pocket money. Traditionally, these platforms operate mobile apps and digital systems to match drivers and passengers in need of each other, rather than operate their own car fleet, in a so-called light-asset model. Think of how other sharing economy post children work, such as Airbnb, “the world’s largest accommodation provider owns no real estate.”
But China’s Didi is changing the norm by extending its reach up and down the value chain, a move aligned with the its heavy-asset operations strategy.
Didi, through its subsidiaries, has invested into a bunch of electric vehicle rental companies to pilot its self-owned car fleet. Under such explorations, drivers are recruited and trained to drive a Didi-owned vehicle, which they can choose to rent or buy.
We reported earlier this year that Didi has struck a deal with a group of 12 automakers from home and abroad to set up an “open new energy car-sharing system”, providing vehicles, car financing and insurance services to individuals and corporates.
The most recent deal with Renrenche.com is just another testament to Didi’s ambition of becoming even more involved in China’s technology-enabled transportation future.