In 2024, the ride-hailing market witnessed a long-anticipated capital surge.

Dida and Ruqi successfully went public, while Caocao Mobility aimed for a Hong Kong IPO. Towards the end of the year, both Vitality Group (HuoLi Chuxing) and Weisheng Times (365YuChe), with ride-hailing concepts, submitted prospectuses for listing on the Hong Kong Stock Exchange's main board. Behind this wave of IPOs by small and medium-sized ride-hailing platforms lies a diverse set of motives. Smaller platforms from various industries hope to leverage ride-hailing services to boost their performance and attract investors, using the resources and status of listed companies to bolster their original businesses. On the other hand, medium to large platforms are investing in the industrial competition of autonomous ride-hailing RobotTaxi, awaiting the next technological revolution in the sector.

A Ride-hailing Vehicle, Three Chapters of Industry Evolution

Industry development is shaped not only by corporate efforts but also by market progress. Before 2010, ride-hailing services did not exist; only taxis were available. The taxi market was long dominated by sellers, characterized by high prices, subpar service quality, and insufficient capacity. Despite clear pain points, they remained unresolved. As the mobile internet matured and began transforming traditional industries, this multi-hundred-billion-yuan market was among the first to be targeted for experimentation. In 2010, Yidao Yongche was founded in Beijing, one of the world's earliest ride-hailing platforms, almost synchronous with Uber in the U.S. market. In the following years, numerous local ride-hailing brands emerged, and Uber entered the Chinese market. With the support of various capital sources, the 'thousand-group war' in the ride-hailing market commenced, with Didi emerging victorious.

Unlike the first-generation ride-hailing platforms with an internet background, most of the second-generation ride-hailing brands are backed by traditional automotive-related industry giants. On one hand, long-term operation may offer greater market value than a one-time sale of cars; more importantly, supporting ride-hailing services can help their products, especially new energy vehicles, find a long-term, large-volume, and stable sales channel. From 2015 to 2019, Shenzhou Zhuanche, Caocao Mobility, Shouqi Limousine & Chauffeur, Enjoy Trip, Ruqi Chuxing (09680.HK), T3 Mobility, and others were established successively. Shenzhou Zhuanche is backed by the former Shenzhou group; Caocao Mobility is controlled by Geely; Shouqi Limousine & Chauffeur is a product of Shouqi Group; Enjoy Trip is invested by SAIC Motor; GAC Group initiated the establishment of Ruqi Chuxing; and T3 Mobility is supported by Dongfeng Motor, FAW Group, and Changan Automobile. With Didi leading the way, closely followed by Caocao, T3, and Ruqi, it seemed there was no room for other brands in the ride-hailing market. However, this changed with the rise of ride-hailing aggregation platforms. As early as 2017, Gaode Maps launched its aggregated ride-hailing service, though it did not provide large-scale support initially. In recent years, as the ride-hailing market entered an adjustment period and Gaode Maps urgently needed to find a more convenient way to monetize, it increased its investment and promoted the aggregation model. Subsequently, internet platforms such as Meituan, Ctrip, Baidu, and Tencent also entered the aggregated ride-hailing market with almost identical models. Gaode Maps and Meituan aim to monetize traffic and quickly achieve immediate profits in the ride-hailing market without conducting in-depth industrial layout. The actual operation of ride-hailing services still needs to be handled by others. Therefore, some small and medium-sized ride-hailing platforms at a disadvantage in the market, such as HuoLi Chuxing and 365YuChe, as well as other transportation operation companies in niche markets, such as Huolala-supported Xiaola Chuxing, have all found new survival spaces with the help of the ride-hailing aggregation model.

One Superpower, Multiple Strongholds, Numerous Smaller Players

The 'thousand-group war' in the ride-hailing market and subsequent industry consolidation, including the acquisition of Kuaidi in 2015 and the merger with Uber China in 2016, firmly established Didi's market position. To date, Didi remains the unassailable leader in the ride-hailing market. Following closely behind are the second-tier ride-hailing brands supported by automakers and deeply rooted in regional markets. According to its IPO prospectus, Caocao Mobility has consistently ranked among the top three ride-hailing platforms in China in terms of GTV (Gross Transaction Value) from 2021 to 2023. Its probable competitor is T3 Mobility. Backed by GAC, Ruqi has rapidly grown into a leading ride-hailing platform in the Greater Bay Area, ranking second only to Didi in terms of transaction volume and penetration rate. Similar platforms include Shouqi Limousine & Chauffeur and Enjoy Trip. Enjoy Trip focused on the Shanghai market for many years before starting a multi-point layout in the national market in recent years. The second tier can also include Dida Chuxing (02559.HK). Founded in Beijing in 2014 amidst the 'thousand-group war' in the ride-hailing market, Dida focused on ride-sharing, avoiding fierce competition and developing quietly with a differentiated strategy until its IPO in 2024, becoming the 'first shared mobility stock.' However, even so, the gap in business volume and market share between them and the leading platform is vast, and it is almost impossible to see any possibility of overtaking at this stage. Caocao Mobility, which 'ranks among the top three,' only had a 4.79% market share in 2023. Therefore, second-tier ride-hailing brands also join Gaode Maps, Didi, and other ride-hailing aggregation platforms to obtain as much business volume as possible. A mature market often operates this way: rather than a do-or-die competitive relationship, it is a series of comprehensive transactions where each party gets what they need. Even taxis, which were previously at odds with ride-hailing services, have gradually recognized reality and joined the service systems of ride-hailing platforms. As such, the structure of the ride-hailing market, characterized by 'one superpower, multiple strongholds, numerous smaller players,' has been maintained for many years.

Small ride-hailing companies are almost negligible in the multi-hundred-billion-yuan ride-hailing market. 365YuChe, with ride-hailing revenue exceeding 1 billion yuan in 2023, may struggle to rank among the top ten in the industry; HuoLi Chuxing's annual revenue is only a few million yuan. Most of these small ride-hailing platforms are deeply dependent on a particular ride-hailing aggregation platform. For example, 365YuChe's dependence on Gaode Maps' business exceeds 90%. When dividing industry forces, they should be classified under Gaode Maps and other ride-hailing aggregation platforms, forming a unique pole in the industry after consolidation.

Secret Strategies of Smaller Players

If it weren't for Vitality Group and Weisheng Times aiming for IPOs with their ride-hailing allure, the market would likely not pay much attention to them. After all, they are too small in size, and their business focus is elsewhere. In 2009, Wang Jiang, who had worked in the TMT industry for many years, founded FlightMaster to provide real-time flight information for travelers. Over time, the business model was enriched, with accommodation bookings launched in 2011 and air ticket booking services added in 2012, along with the introduction of TrainMaster, providing train dynamic information and ticketing services. In 2015, the ride-hailing service HuoLi Chuxing was launched. In 2012, Jiang Shengxi, former vice president of UFIDA Network, resigned to found Travel 365. If the core of Vitality Group is FlightMaster, then Travel 365, the start-up business of Weisheng Times, is the flight master of road passenger transport. In 2018, the company entered the ride-hailing market and launched 365YuChe. They are all leading platforms in their respective niche markets. However, nowadays, the more important labels attached to them by the market are that of outsiders in the ride-hailing market and manufacturing brands under ride-hailing aggregation platforms. The reason they are willing to accept such a market positioning and survive in the cracks between ride-hailing platforms is mainly because they have obtained the desired story and scale in the ride-hailing market. Vitality Group's business may only be a function of many OTA platforms. With the ride-hailing service, FlightMaster + TrainMaster + HuoLi Chuxing form a 'brand new' one-stop integrated travel platform market, where the company ranks second. Weisheng Times' Travel 365 ranks first in the road passenger transport information service market. However, this market is too marginalized; in 2023, the company's revenue from passenger transport services was over 100 million yuan, while ride-hailing revenue exceeded 1 billion yuan. Without the ride-hailing business, Weisheng Times' scale might not have been bold enough to aim for a Hong Kong IPO. Due to the distorted bidding business model of aggregated ride-hailing, Weisheng Times has also paid the price of losses. From 2021 to 2023 and the first half of 2024, the company's net losses were 587 million yuan, 499 million yuan, 482 million yuan, and 285 million yuan, respectively. With the initiative in the hands of aggregation platforms, the company has neither current profits nor a clear future industry value. Their true goal may be to use the ride-hailing business to secretly maneuver – enhancing business scale through ride-hailing services, buying time to gain space, and leveraging the status and resources after going public to support the development of their original core business. In recent years, Weisheng Times has made frequent moves in the road transport service market, acquiring Hengsheng Yuanchang in 2021 and Anhui Wanmei in 2024, becoming the absolute leader in this niche market. Ultimately, no one wants to struggle for survival in the cracks between giants; everyone wants to be a platform and gain a voice in their own niche market.

This is the flaw in the ride-hailing aggregation model: the underlying ride-hailing companies each have their own agenda; the top-level aggregation platforms only want immediate profits and do not care about industry development. This divergence in industrial goals determines that the ride-hailing aggregation model is unlikely to continue experiencing significant growth. Data shows that after several years of subsidies and market adjustments, the business volume under the aggregation model, which accounted for 25% of the total ride-hailing business volume, has failed to grow further. This might be the ceiling for aggregated ride-hailing. Therefore, the aggregation model dominated by traffic platforms can only be an episode in the ride-hailing market. So, who will be the new story in the ride-hailing market?

Collectively Awaiting the Technological Singularity

In recent years, under the coercion of the aggregation model, the ride-hailing market has experienced intense internal competition, with platforms squeezing each other, drivers not making money, and consumers perceiving a decline in the overall service quality of ride-hailing. However, from a macro industry perspective, with the full recovery of car-using scenarios, increased user stickiness in ride-hailing, and price reductions due to internal competition, the business volume of ride-hailing in China has increased significantly. Monthly ride-hailing orders have increased from around 600-700 million in previous years to approximately 1 billion in recent months. This contradicts the public's daily perception of the ride-hailing market. However, behind the optimistic total volume lies compressed growth and structural surplus. As a result, the decline in service prices and average order volume has led to an increased elimination rate of platforms and drivers in the ride-hailing market. The ride-hailing market has entered a brief consolidation period. To break through these bottlenecks, enable the industry to exit the spiral of internal competition, and regain high-quality growth, the focus should be on stock operation in the short term and technological increment in the long term. In recent years, Didi, like Meituan in previous years, has continuously expanded its boundaries in the mobility circle. In addition to ride-hailing on the app's homepage, there are three main menus: 'Car Owner,' 'Booking,' and 'Delivery,' signifying a leap from the ride-hailing competition fence to a mobile mobility ecosystem. Caocao Mobility has introduced a customized ride-hailing service, leveraging the industrial advantages of its controlling shareholder Geely. Tens of thousands of Caocao 60 and Fengye 80V vehicles have become the foundation for optimizing service quality at Caocao.

Nevertheless, both ride-hailing aggregator platforms and smaller, medium-sized ride-hailing brands are acutely aware that the current business model is not sustainable. To advance, they must pivot and anticipate the next technological revolution in the ride-hailing sector. A prime example of this is the advent of autonomous ride-hailing, commonly referred to as Robotaxi. Given considerations such as scenarios, technology, cost, and regulatory framework, the large-scale deployment of autonomous driving technology is most viable in the B-end market. Currently, Baidu's Robotaxi service, Luobo KuaiPao, has been operational in Wuhan for an extended period. Tesla, Didi, and Ruqi are also prominent players in this domain, actively preparing for this transition. When autonomous ride-hailing reaches a significant market share and demonstrates to the industry that the overall operational efficiency of the technology-driven model surpasses the existing one, it will mark a transformative moment for the ride-hailing market. The question remains: how many years do we have to wait for this milestone?