April 6, 2018 / 6:49 AM / in 7 months

Chinese Uber rival Didi launches in Mexico, recruits drivers

MEXICO CITY/SAN FRANCISCO (Reuters) - Chinese ride-hailing company Didi Chuxing has publicly launched in Mexico with a website advertising its service to drivers and passengers, setting the stage for a potentially expensive showdown with rival Uber.

FILE PHOTO: The logo of Didi Chuxing is seen at its headquarters in Beijing, China, May 18, 2016. REUTERS/Kim Kyung-Hoon/File Photo

A spokesman for Didi Chuxing Technology Co told Reuters that the company will launch first in Toluca, an urban hub located around 60 kilometers (37 miles) from the country’s capital. Didi has an operations hub in the trendy Juarez neighborhood in Mexico City.

Didi settled on Toluca, the capital of the central state of Mexico, because it is a “robust regional commercial and cultural” center, said the spokesman, who declined to be named. Its priority will be to learn from local communities about their transportation needs, the spokesman said.

The app will go live later this month, according to a source familiar with the plans.

The Didi spokesman declined to comment on the timeline. Didi’s Mexico website says the company will begin operations “very soon,” without providing a date.

Meanwhile, Didi is working to quickly recruit drivers with the promise of higher earnings than competitors are offering. The new Didi website says the company will take no cut of fares until June 17, and is offering bonuses to drivers who recruit other drivers and passengers, a common tactic for ride-hailing companies vying to gain market share.

After mid-June, Didi is planning to take a 20 percent cut of fares, below the 25 percent commission on rides in Mexico charged by its biggest rival, Uber Technologies Inc [UBER.UL].

Late last year, Didi started laying plans for Mexico, Reuters reported, in what will be the company’s first launch outside Asia. Mexico’s clogged streets, underdeveloped public transit system and growing base of smartphone users make the country ripe for app-based ride services.

UBER RIVALRY

In Mexico, Didi will for the first time put its own service up against Uber, its chief international rival.

Uber is the ride-hailing leader in Mexico, where it has seven million users in more than three dozen cities. Uber held 87 percent of the market in Mexico in August, its highest share in Latin America, according to Dalia Research, a Berlin-based consumer research firm.

A spokesman for Uber declined to comment.

Didi says it aims to attract drivers and passengers by promoting a safe service. The company has created a security button on its app that will connect drivers and passengers with police and other emergency contacts if they find themselves in danger, its website said. The company is also staffing a safety task force to respond to issues around-the-clock.

Didi will start off with a car service, although two sources said the company was also considering other modes of transportation such as scooters, motorcycles and bike-sharing.

While Mexico City and certain Mexican states have taken a strict approach to ride-hailing rules, the state of Mexico offers a friendly regulatory landscape, said Carlos Martinez, head of the Center for Citizens and Consumers.

“One of the principal reasons (to launch in Toluca) is the regulation in the state of Mexico, which is more or less lax, and the other is that Toluca has lots of economic activity,” he said.

A new train between Toluca and Mexico City set to open soon will also provide opportunities for Didi to shuttle commuters from their homes to the station, Martinez said.

Reporting by Julia Love and Heather Somerville; editing by Jason Neely and Rosalba O'Brien

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