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Didi Investing $1 Billion Into its Auto Service Platform

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【Summary】Didi Chuxing Technology, China’s largest ride-hailing service, said on Monday it will invest $1 billion in its auto services business as the company ramps up to a widely anticipated initial public offering (IPO).

FutureCar Staff    Aug 06, 2018 4:26 PM PT
Didi Investing $1 Billion Into its Auto Service Platform
author: FutureCar Staff    

BEIJING — Didi Chuxing Technology, China's largest ride-hailing service, said on Monday it will invest $1 billion in its auto services business as the company ramps up to a widely anticipated initial public offering (IPO), Reuters has reported.

The company started offering auto services in 2015, but it launched a platform that unified the services in April this year. The auto services business includes auto leasing, car maintenance and gas station services. DiDi's auto-services platform has been built together with some 5,000 partners, the company reported.

Didi's auto service business has gross merchandise value (GMV) sales of 60 billion yuan ($8.79 billion). The unit will be consolidated under new business Xiaoju Automobile Solutions Co., Didi said.  

"Building on our service to 30 million Didi drivers, we will strive to develop a leading one-stop auto solutions platform capable of winning the highest trust of car users," said Kevin Chen, who heads Xiaoju.

The decision comes as Didi is preparing for a much anticipated IPO, which could happen as early as next year, according to people familiar with the plans. However, the Chinese ride-hailing company has not confirmed any official plans for the listing.

Last month, sources told Reuters that Didi's car services unit is worth $2 to $3 billion, and that there are plans to spin it off from Didi's main business before a potential listing.

Xiaoju currently operating in 257 cities with approximately 7,500 partners and distributors. By the end of this year, annualized sales are expected to exceed 90 billion yuan ($13.17 billion).

The ride-hailing firm has also invested heavily in expanding its core business outside its home market. Didi has begun working in Southeast Asia, Brazil, Mexico and Australia by either investing in local partners or launching their own services.

Uber unsuccessfully tried to compete against Didi in China. However, the U.S. ride hailing giant eventually sold its operations to Didi in 2016 after dealing with unexpected regulatory issues, including the processing of customer payments and the limitations of Google Maps in China.

An IPO from Didi would be one of the largest in recent years. The company's $56 billion valuation makes it one of the world's most valuable startups.

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