Warnings of overcapacity in China’s ride-hailing sector spread amid weak demand
- At least six cities in China have issued warnings about a saturation of the ride-hailing market since July, seen by many as an option amid a bleak job market
For years, becoming a ride-hailing driver had been considered a last resort for many jobless people in China, but it may not be the case any more.
The road authority in Jiaxing in eastern China’s Zhejiang province released a risk alert on Tuesday that ride-hailing drivers had seen their average daily orders and incomes decline due to an oversupply of vehicles, warning against “blindly entering the market”.
In the past month, at least five other cities, including the southern cities of Shenzhen and Suzhou, have issued similar alerts, suggesting the industry in many regions is approaching or has already reached a state of overcapacity.
The warnings also came as growth in demand slows amid weak economic activity and challenges from driverless taxis emerge, said analysts.
The downgrading in spending may also have contributed as car hailing services are relatively more expensive than traditional taxis and public transport
Jiaxing reported an increase in the number of orders in the second quarter, but each vehicle on average took 11.9 orders per day, with average daily revenues of 214.7 yuan (US$30) before deducting operating costs, down by 0.6 orders and 9.9 yuan, respectively, compared to the first quarter, according to the Jiaxing Public Road and Transportation Management Centre.