Didi Offers Details of Its Income Structure to End Rumors about Excessive Commission

Source: Didi Chuxing

Chinese ride-hailing giant Didi Chuxing offered details on the income it derives from ride-hailing services on its Wechat official account on Friday. The decision is an attempt to stem public doubts about excessive commissions and blurry rules on profit distribution.

Xinhua News had asked in a commentary earlier this week why the company’s users are paying more fares and drivers are making less, calling on regulators to look into the platform’s pricing mechanisms.

According to the company, in 2020, 79.1% of what customers paid for a ride was allocated to drivers, with 10.9% for passenger subsidies, 6.9% for business operating costs, tax payments and service charges. Only 3.1% of passenger fees for rides added to the platform’s profit. Thanks to increasing safety investment, the firm has turned profitable, with a net margin of 3.1% for 2020.

When a ride ends, the driver’s income and the passenger’s fares are calculated by two different pricing rules. The proportion of the former to the latter varies according to areas, distance, time, road congestion and other factors. The company said they will try their best to prevent extremely high charges.

Didi also unveiled that driver’s income consists of commissions and subsidies. Apart from basic fees, commission covers tips, premiums on the basis of mutual consent, compensation for canceling scheduled orders, service fees during holidays, etc.

The platform provides extra subsidies for drivers to take orders in bad weather and traffic peaks, during holidays and in areas with strong demand. The award for taking a certain amount of orders in a specific time range is also a very innovative incentive.

Didi noted in the statement that they still have a long way to go to ensure passengers can afford reasonable prices and drivers can enjoy a steady income growth. In the future, they claim they will welcome criticism and supervision from the public.

Nine-year-old Didi Chuxing has filed confidentially with SEC for an initial public offering led by Goldman Sachs and Morgan Stanley, Reuters reported in April. The company tried to increase its presence in flourishing sectors like autonomous driving and community group buying.

SEE ALSO: Didi Said to Consider Separate IPO for Its Community Group-Buying Operation

However, its worth noting that the company was fined 500 thousand yuan ($78 thousand) as Beijing’s crackdown on the country’s big tech groups picked up steam.