Taxi apps poised for transition to chauffeur service niche
In the future Kuaididache and Didi Taxi shift the focus of their main operation to chauffeur service and channeling their existing users to it.
China’s taxi apps netted 172 million user accounts as of December 2014, with Kuaididache and Didi Taxi taking a 56.5% and 43.3% split of the market while operating networks covering 360 and 300 cities respectively, according to the “China Taxi App Market Q4 2014 Report” published by internet statistical firm eGuan.
The report stated that the taxi app market distribution has stabilized after both companies received large investments, though a new battle-front on subsidies is looming. Both taxi app companies yielded significant numbers of users in the last subsidy war. Many of them were drawn by the high cash subsidies offered by the apps but some fell by the wayside as the subsidies were reduced.
In light of this, the impending subsidy war will likely be focused mainly on regaining lost users rather than recruiting new users. They will also rely on improved services to retain users and turn them into core loyal customers.
Both companies separately launched chauffeur service brands in the end of 2014. Although the convenience of online chauffeur services make it a good alternative to traditional taxis, lack of consumer confidence over safety is a key hurdle. As a result, chauffeur services are partnering with third party insurance companies to overcome this barrier.
Although Kuaididache and Didi Taxi face competitors like Uber in their drive into the taxi market, the sense of luxury and their uniqueness ensure greater customer loyalty and average revenue per user (ARPU) for chauffeur service than taxis.
In the future Kuaididache and Didi Taxi will take the lead in the chauffeur market by shifting the focus of their main operation to chauffeur service and channeling their existing users to it, according to eGuan’s analysis.(Translation by David)