Why is it getting harder and harder to drive an online car-hailing service?

Travel a guest

2024-05-24 07:20Posted in Beijing Automotive Creators

Text | Deng Yujie and Li Huiyin

Edit | Lee H.Y. Yin

Ride-hailing has transformed the travel experience, and now it's facing new challenges.

"Be vigilant, the capacity of online car-hailing is saturated", this old news has once again aroused public opinion.

Recently, regulatory authorities in many places across the country have issued industry warnings, publicly reminding them to be cautious about entering the online car-hailing industry. Behind this short news, there are different challenges and hardships at both ends of the driver, the platform and the regulatory authorities.

From the perspective of passengers, the taxi effect is faster, but it seems that the experience is poor; From the driver's point of view, the working hours are longer, but the income is less; From the perspective of the platform, based on big data to dynamically match orders and supervise the safety of drivers and passengers in real time, these costs are not low, but it is difficult for the public to see the value; From the perspective of the regulatory authorities, there is a need to strike a balance between the "flexible employment reservoir" and compliance and controllability.

The National Development and Reform Commission (NDRC) has issued a document mentioning that food delivery riders and online car-hailing drivers are "reservoirs" that absorb employment.

It is worth mentioning that, not only the early warning, but also the suspension of the new business of accepting online car-hailing transportation permits, and the new market capacity of the gate is closed. This may be able to reduce the number of new capacity on the books, but how to meet the employment needs of these people and how to prevent them from becoming "black cars" that are more difficult to supervise will also test the wisdom of many parties.

01 The "reservoir" of employment is almost full

In 2021, eight departments, including the Ministry of Human Resources and Social Security and the National Development and Reform Commission, jointly issued the Guiding Opinions on Safeguarding the Labor Security Rights and Interests of Workers in New Forms of Employment, proposing that all workers in new forms of employment be included in the scope of basic public services for labor security. These include jobs such as food delivery workers, online car-hailing drivers, and truck drivers who rely on Internet platforms for employment.

Cui Dayong, Secretary of the Party Committee and CEO of T3 Mobility, once said that with the recovery of the economy, new consumer enterprises represented by the platform economy have also ushered in rapid development, and the proportion of new employment forms such as online car-hailing drivers has increased significantly, and the online car-hailing industry has become a "reservoir" of employment in China.

However, since the beginning of this year, many places across the country have issued risk warnings for the online car-hailing industry, publicly reminding them to be cautious about entering the online car-hailing industry. Early warning information shows that the capacity of online car-hailing in many places has become saturated, or far exceeds the actual demand.

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On April 16, the Chongqing Municipal Road Transport Affairs Center issued a risk reminder for industry operations, saying that the capacity of online taxi reservations in the central urban area has far exceeded the actual demand, and the operation is risky, so it is necessary to be cautious when entering the industry.

As of the end of March 2024, there are 118,000 vehicles in the central urban area of Chongqing that have obtained online car-hailing transportation certificates, but only about 48,000 vehicles have an average daily attendance (with order receiving records), and the average daily order of a bicycle is 13.6, with an average daily turnover of about 321 yuan (excluding commissions and service fees).

On May 20, the Jingdezhen Municipal Transportation Bureau of Jiangxi Province issued a risk warning notice for the online car-hailing industry, saying that due to factors such as the rapid increase in the number of online car-hailing and employees, the average daily order of online car-hailing bicycles in Jingdezhen urban area is about 15, and the average daily operating income of bicycles is about 240 yuan. On the whole, the urban online car-hailing capacity tends to be saturated.

Industry risk warnings also include cities such as Dongguan, Wenzhou, Jinan, Shangqiu, Putian, and Yingtan, and some cities have even directly decided to suspend the issuance of online car-hailing business permits and transportation permits, such as Sanya.

But before the industry risk warning arrived, some subtle changes had already occurred. Ms. Li, a Shanghai-based black gold user of several ride-hailing platforms, told Caijing Auto (ID: caijingqiche) that the experience of taking a taxi has deteriorated significantly recently. The most direct point is the odor in the car, such as cigarettes, body odor, excessive perfume, etc., which makes her prone to motion sickness. Sometimes when she takes the baby out or takes a long-distance ride, she will specially increase the price and check the more expensive model.

Behind this, the driver also suffers. Mr. Zhang, who came to Shanghai from Anhui Province to drive, told Caijing Auto (ID: caijingqiche) that the working hours are getting longer and longer, the roads are getting more and more congested, and the number of orders, especially long-distance high-quality orders, is getting less and less. I have been driving an online car-hailing service for six years, and I feel that my income is getting lower and lower, so in order to make more money, I can only take more orders, and the time I rest every day is to smoke a cigarette and brush my mobile phone while charging. According to him, some out-of-town drivers drive in big cities, and in order to save costs, they simply choose to live in the car. "After driving for a long time, I also have back pain, the perfume in the car is not good, and some people are too heavy when I put it, and we are also very helpless."

An insider of an online car-hailing company said that it is "a headache" to face such customer complaints, because empathy, I can understand that passengers want a good experience, and I can also understand the hard work of drivers in taking orders, but similar to the smell of such requirements, many of them enforce standards in the landing link. Therefore, it is more used as a bonus to improve the driver's "service score" (the scoring system that affects the driver's share and the distribution of high-quality orders) to encourage the driver to pay attention.

02 Passengers spend more, drivers earn less, where does the money go?

For consumers, the well-known online car-hailing platform companies mainly include Didi Chuxing, Cao Cao Chuxing, Shenzhou Limousine, T3 Chuxing, Meituan Taxi, AutoNavi Taxi, etc. In fact, there are far more ride-hailing companies than that.

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On April 29, the Ministry of Transport released the basic operation of the online car-hailing industry in March 2024, as of March 31, 2024, a total of 345 online car-hailing platform companies across the country have obtained online car-hailing platform business licenses, and a total of 6.791 million online car-hailing driver licenses and 2.847 million vehicle transportation licenses have been issued in various places, an increase of 76,000 and 28,000 respectively compared with the previous month.

When the number of ride-hailing platform companies is overflowing and consumer attention is limited, how to reach customers for the 345 companies has become a problem. The solution given by the ride-hailing market is to set up an aggregation platform.

China's ride-hailing industry is mainly divided into three models, pure self-operation, combination of self-operation and aggregation, and pure aggregation ride-hailing platform. Most platforms will not choose pure self-management, the cost of covering the market is high, it is difficult to continue, and most of them choose a combination of self-operation and aggregation, such as Cao Cao Travel, Didi Travel, or even only do aggregation functions, such as Gaode Map, Baidu Map, etc.

For example, when consumers choose a destination, AutoNavi will resell the order to its ride-hailing company. Most of the time, consumers filter models by price, and do not pay much attention to which brand actually undertakes orders, and it is difficult to distinguish the difference between many online ride-hailing companies.

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The advantages of the aggregation model are obvious, as consumers do not have to download multiple apps to hail a nearby car in the shortest possible time. Drivers can also take advantage of the platform to take more orders. But the problem is that with each additional layer of platforms, the commission will also be more, and the actual income of the driver will be less, which seems to be a paradox.

Whether it is a self-operated or pure aggregated online car-hailing platform, there is a lot of software and hardware cost investment around guarding the safety of drivers and passengers, matching car needs, formulating platform evaluation systems, and adjusting operating rules according to market demand. For a long time, what they are most troubled about is that this part of the investment is difficult to be felt by the public, including both drivers and passengers, which is also the main reason why the rationality of "commission" has been questioned for a long time. However, now, there is a new situation of "resale orders", from the passenger to the driver to collect the money, the commission ratio is too high, causing a new round of heated discussions.

Gu Dasong, executive director of the Traffic Law and Development Research Center of Southeast University, paid attention to the problem of reselling online car-hailing orders at the end of 2023, and found that a passenger paid 98.11 yuan for a taxi, and the driver's terminal showed that the passenger paid 71.46 yuan, and the actual income was only 52.17 yuan, and the commission rate was as high as 46.8%.

This is a typical case of the aggregation platform commission, the aggregation platform extracted the first layer commission of 98.11-71.46 = 26.25 yuan, and the platform where the driver is located draws the second layer commission of 71.46 * 26.99% = 19.28 yuan according to the proportion, and finally reaches the driver's income of only 52.17 yuan.

The Ministry of Transport mentioned in the "Sunshine Action" that it urged online car-hailing platforms to open and transparent pricing rules to the public, set the upper limit of the platform's commission ratio and publicly release it, and at the same time display the commission ratio of each order in real time on the driver's side. 30% is the current industry norm of the upper limit, and many regions have been lowered.

At the legal level, Liu Xinyuan, a lawyer at Shanghai Qinbing (Beijing) Law Firm, said that there is still a lack of clear legal regulations on the sharing ratio of online car-hailing aggregation platforms, but the Ministry of Transport stipulates in the "Opinions on Strengthening the Protection of the Rights and Interests of Employees in New Business Formats" that online car-hailing trade unions should cooperate with platform industry associations to make public disclosure of the sharing ratio.

In this regard, Gu Dasong believes that it is necessary to improve the platform rules such as commissions and dispatches, and establish and improve the relationship between the platform and drivers in an open, fair and just manner; Optimize the working and living conditions of drivers, including providing suitable and preferential rental car sources and residential housing support, and improving vehicle design to help drivers; Actively support veteran drivers in the same township to carry out "mentoring" for novice drivers.

An insider of an online car-hailing company told Caijing Auto (ID: caijingqiche) that the company has received more and more information about new driver applications. However, some regions have already begun to freeze new registrations. Some drivers are unable to register in compliance for some reason, and end up flowing into some small companies at the tail, and then use the platform to request a ride. This aggravates the involution and also brings risks.

03 It is advisable to be sparse and not blocked, and the future of driver service is the key

Driving an online car-hailing service from zero to one compliantly is not a particularly easy task. Just renting a vehicle in a different place, drivers often encounter a lot of routines, in the scattered car rental companies, encounter the cost of watching people put down dishes, and the service package can not keep up with the dilemma.

The National Development and Reform Commission (NDRC) has issued a document saying that there are also many problems in the process of flexible employment, including the development of online car-hailing drivers. For example, due to the uncertainty of labor relations, the protection of workers' rights and interests has been greatly impacted; The platform commission ratio is not set reasonably enough; Wait a minute. More importantly, the employment instability inherent in flexible employment not only makes workers' own jobs unsecure, but also increases the overall risk of employment. Therefore, it is necessary to further standardize and develop flexible employment, and give better play to the positive role of flexible employment in solving the current employment problems in China.

In fact, online car-hailing itself is a service transaction between people, and the consumption scenarios and customer groups are becoming more and more abundant. This makes a car hard to find, but a good driver hard to find. In order to retain good drivers and achieve corporate social responsibility at the same time, some companies have taken the lead.

Previously, Didi launched the "Orange Will Protection Plan", introducing various forms of driver incentives and subsidies, as well as various commission-free incentives, so as to implement the requirements of the competent authorities to reduce excessive commissions. At the same time, United Insurance Company has piloted the launch of commercial pension security, family medical care and accident insurance for drivers, and the platform provides subsidies.

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Not only that, but this has also given rise to new business models.

In March 2023, Happiness Million's Travel Capacity Service Center in Chongqing will open, similar to the user experience center of the new car-making force, which provides online car-hailing drivers with a package of services from car buying and renting, corporate training and certification, to charging for electricity, eating and resting, and an online app.

The chairman of the Happy Ten Thousand Family is none other than Liu Jinliang, who founded Cao Cao. "My team and I have a small goal, hoping to help each online car-hailing driver save 1,000 yuan a month and take two more days off." He told Caijing Auto (ID: caijingqiche).

The company does not provide ride-hailing services directly, but instead provides compliant capacity for different ride-hailing platforms to help them manage their drivers. At a time when more and more emphasis is placed on capacity compliance, ToB companies with drivers in hand may have a greater say in the face of online car-hailing platforms. In addition, with the increase in the number of drivers, including a package of auto finance service providers, there will also be new business ecological play.

04 The transformation of online car-hailing is at the right time

The ride-hailing industry is facing a period of transition, with companies betting on car-making, intelligent driving, charging and swapping, and more recently, there has been a boom in companies going public in Hong Kong.

On the afternoon of May 19, Cheng Wei and Liu Qing issued an internal letter to all employees. In the letter, Cheng Wei, chairman and CEO of Didi, decided to promote Liu Qing to permanent partner of the company, Liu Qing will no longer be the company's director and president, and the company will no longer have the position of president in the future. The internal letter mentioned that Liu Qing will continue to serve as the company's chief talent officer, focusing on the company's talent, organizational construction and social responsibility, and will continue to report to Chairman and CEO Cheng Wei.

Recently, Didi has launched a series of cross-border cooperation around the new energy and intelligent network functions of operating vehicles. In April 2024, Guangzhou Andi Technology Co., Ltd., a joint venture between Didi Autonomous Driving and GAC Aion, was approved for an industrial and commercial license, with each party holding 50% of the shares. GAC Aion told Caijing that the two sides will jointly build a Robotaxi (self-driving taxi) production car, which will be launched in batches and orderly in the future, and will be connected to the Didi Chuxing network in the form of hybrid dispatch.

Making cars has been on the road, and at the same time, Didi is also eyeing charging and swapping. In January 2024, CATL and Didi Chuxing announced that they had signed a joint venture agreement on January 26 to officially establish a battery swap joint venture.

According to the agreement, the battery swap joint venture will rely on the technical advantages and operational capabilities of both parties to provide efficient battery swap services for many new energy vehicles from the online car-hailing scenario. This cooperation is positioned as an important strategic layout in the field of public energy supplementation, and the two parties will lead industry services and technical standards, improve resource utilization and social operation efficiency.

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This year, three online ride-hailing companies have officially submitted applications for Hong Kong stock IPOs, with Cao Cao, Dida and Ruqi on March 19, March 25 and April 29 respectively.

Gong Xin, CEO of Cao Cao Travel, once told Caijing Auto (ID: caijingqiche) that subsidies can bring orders, which is self-evident. Nowadays, some companies rely on their pockets to have money and take a short and fast subsidy path, but after the subsidy is withdrawn, what will they do to retain users? It's all about experience and efficiency.

Relying on the background of Geely Group, Cao Cao chose to leverage its strength to achieve customized car manufacturing, and has obvious advantages in cost, procurement, and supply chain. Consumers can clearly identify the online car-hailing car with Cao Cao's travel logo, complete a one-key ventilation before getting into the car, and self-control the temperature in the car, connect to Wifi and play songs by scanning the code.

Is online car-hailing a good road?

An industry executive who entered the online car-hailing industry in the early days once revealed to Caijing Auto (ID: caijingqiche) that OEMs are blind if they do not make a market. Only by reaching out to end consumers more broadly can we obtain consumer feedback and upgrade and iterate models.

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Ride-hailing undoubtedly has the richest set of data. According to the executives, if autonomous driving technology can be applied to the ride-hailing field, more data can be collected and the intelligent driving system can be better upgraded.

If we say that the end game of the future car travel industry is, as many institutions say, from private cars to universal sharing, from manual driving to high-level autonomous driving. The products created by car companies will change, and the core point of the entire industry chain will also change. At that time, the core is the ownership of key technologies, and how to operate the entire fleet and efficiently deploy to meet consumer needs, which is behind the algorithm and a lot of offline operation and maintenance experience, which not only need to rely on money, but also take time to solve.

This is exactly what automakers are aiming to do from automakers to mobility service providers. Compared with online car-hailing companies that build their own heavy assets, car companies build online car-hailing platforms from scratch, and the cooperation between the two sides is more lightweight, and there is the possibility of achieving one plus one is greater than two.

Editor-in-charge: Zhao Cheng

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