STREAMING NOW: Watch Now

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.

Mississippi Coronavirus Cases

Data is updated nightly.

Cases: 265146

Reported Deaths: 5777
CountyCasesDeaths
DeSoto17741191
Hinds16891332
Harrison14279204
Rankin11239220
Jackson10917190
Lee9071145
Madison8599169
Jones6731118
Forrest6208124
Lauderdale6121192
Lowndes5544120
Lafayette520598
Lamar505865
Washington4933125
Bolivar4126109
Oktibbeha408382
Panola386981
Pontotoc377460
Monroe3686110
Warren3685103
Marshall357170
Union356864
Pearl River3495106
Neshoba3490154
Leflore3118109
Lincoln306788
Hancock294262
Sunflower291975
Tate280662
Alcorn273154
Pike270181
Itawamba269363
Scott260048
Yazoo256756
Prentiss253754
Coahoma249755
Copiah249749
Tippah249750
Simpson242872
Leake238167
Marion224273
Grenada223972
Covington221073
Adams215171
Wayne213734
Winston207671
George204739
Newton199946
Attala197064
Tishomingo194961
Chickasaw189344
Jasper181138
Holmes172068
Clay166837
Tallahatchie157235
Stone152525
Clarke148162
Calhoun141322
Smith130026
Yalobusha123335
Walthall114537
Greene113729
Noxubee113026
Montgomery112036
Carroll106822
Lawrence106817
Perry105131
Amite102126
Webster96824
Tunica89021
Claiborne88825
Jefferson Davis88430
Benton85823
Humphreys84724
Kemper80920
Quitman7139
Franklin70617
Choctaw63713
Wilkinson59825
Jefferson56821
Sharkey45217
Issaquena1606
Unassigned00

Alabama Coronavirus Cases

Cases: 441170

Reported Deaths: 6660
CountyCasesDeaths
Jefferson646811007
Mobile31620572
Madison28310217
Tuscaloosa21525275
Montgomery19954332
Shelby19335132
Baldwin17256189
Lee13205107
Morgan12639142
Etowah12107181
Calhoun11521206
Marshall10471123
Houston9009164
Limestone834981
Cullman8274124
Elmore8214110
DeKalb7894107
Lauderdale7871107
St. Clair7854130
Talladega6481112
Walker6036183
Jackson601545
Colbert549994
Blount547386
Autauga537662
Coffee462464
Dale410785
Franklin374950
Russell357515
Chilton345473
Covington339680
Escambia335444
Tallapoosa3149109
Dallas313296
Chambers304270
Clarke300236
Pike262531
Lawrence254155
Marion253761
Winston233642
Bibb222348
Geneva211547
Marengo209331
Pickens199631
Hale185244
Barbour182738
Fayette178629
Butler174460
Cherokee165731
Henry159925
Monroe152421
Randolph146436
Washington142327
Clay130546
Crenshaw124045
Macon122337
Cleburne121825
Lamar120222
Lowndes115536
Wilcox107922
Bullock103528
Perry100018
Conecuh97922
Sumter90527
Greene77923
Coosa63618
Choctaw51924
Out of AL00
Unassigned00
Tupelo
Cloudy
68° wxIcon
Hi: 75° Lo: 53°
Feels Like: 68°
Columbus
Cloudy
66° wxIcon
Hi: 75° Lo: 56°
Feels Like: 66°
Oxford
Cloudy
68° wxIcon
Hi: 72° Lo: 51°
Feels Like: 68°
Starkville
Cloudy
64° wxIcon
Hi: 75° Lo: 54°
Feels Like: 64°
WTVA Radar
WTVA Temperatures
WTVA Severe Weather