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CNNIC Releases Research Report on Development of Car-hailing Service Market
2016/01/11 10:49author:
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  CNNIC has recently released its Research Report on Development of Car-hailing Service Market (hereinafter referred to as the Report). The Report gives an objective picture of the development trend of the market for car-hailing services and the problems it faces by analyzing the driving forces of and obstacles to its development, the industrial pattern behind this market, competitions between enterprises involved, users’ reliance on car-hailing services, and the role of such services in providing supplementary transportation capacity.

  Comparing the driving forces of and obstacles to the development of the market for car-hailing services, during 2010-2013, there were more obstacles than driving forces. This is mainly manifested in the following aspects: the development strategy for car-hailing services is subject to restrictions; the market for car-hailing services is for the minority not the majority of people; conditions are not ripe for development in this regard, many people have not yet developed the habit of using mobile Internet; policies and public opinions are against it; and pioneer enterprises in this sector have suffered from policy resistance and pressure of public opinion. In the meantime, the driving forces for the development of this market are mainly the current economic boom and technological progress. 

  In 2014, car-hailing services rose rapidly, driven by various factors. In 2015, some authorities lifted restrictions on this market based on actual conditions. Therefore, during these two years, driving forces got the upper hand. Major manifestations are as follows: Demand of boomed at both ends of the market with drivers wishing to make better use of their cars and riders hoping for better travel efficiency; relevant service providers carried out effective marketing campaigns, reshaping people’s habit of car use by offering subsidies; driven by the Internet Plus Initiative, the government lifted restrictions on this market under certain conditions. During this period, major obstacles to the development of the car-hailing market were conflict of interest within the industry, absence of taxation policy for this market, etc. 

  In terms of market position and market structure, car-hailing services are well positioned for concrete O2O implementation for they are based on O2O apps on mobile devices and thus have easy access to geographic information and easy connection to payment services. The positioning of car-hailing services determined that they have good market opportunities in large and medium-sized cities, in most of which purchase restrictions or license number-based traffic control measures are in place for private cars, taxi capacity is relatively low, and roadside parking space falls short of demand. This contributed to the user stickiness of car-hailing services to some extent. Meanwhile, target user of car-hailing services tend to have more demand for shopping, travel, ticket booking, hotel reservation, car use away from their home city, high-end restaurant dining, etc. Therefore, car-hailing apps attracted heightened attention from large domestic Internet companies and car rental companies for their high value in user base segment and customer realization. After rounds of marketing efforts, the current market distribution is generally stable. Didi and No. 1 are in the lead with a market share of 87.2%, Uber is catching up, and Yidao and Shenzhou have secured a foothold in some market segments with their respective advantages. 

  In terms of user demand for and reliance on car-hailing services, since taxis fail to meet the growing demand for custom-made travel experience, car-hailing services filled the gap by offering convenience, better-targeted services and higher service quality and thus, building a rapidly growing customer base. Currently, car-hailing services remain more targeted at the minority of the population, mainly mobbing Internet users with relatively high consumption capacity. According to the Report, by June 2015, the market for car-hailing services covered a total of 21.65 million people. The majority of car-hailers have a monthly income of RMB 3,000-5,000. Regarding the motivation for using the service, sticky users mostly use it out of habit, which means they use it as a routine way to get around. Such users account for 23.3% of the total. Regular users of car-hailing services use it as a substitute of taxi service, which means they hail cars when no taxi is available. These users account for 55.1% of the total. Occasional users of car-hailing services are mostly driven by the benefits offered during marketing campaigns, which means they hail cars when they have coupons. This group accounts for 26% of the total. Here we can see that the development of the car-hailing market is mainly driven by demand. 

  As mobile Internet booms, major car-hailing service providers created innovative business models in order to meet people’s transportation demand. It is foreseeable that as relevant laws and regulations improve, transportation-related services will be an important part of “Internet + Convenient Transportation” and achieve lasting development. 


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