BMW has been given a licence that will enable it to launch a ride-hailing company in China this coming December. The grant made it the first global car manufacturer to be able to penetrate the competitive market.
It will be operating under the name BMW Mobility Service. BMW said that its licence has been granted for initial operations in Chengdu, the capital of Sichuan province.
The Chinese market is considered as a hotbed of rivalry. It is currently dominated by Didi Chuxing which has more than 217 million users. It also has a market share amounting to 90 percent after it merged with Uber China in 2016. Currently, the sector is worth $30 billion (£23.4 billion). It is expected to grow to $72 billion over the next two years. According to Bain & Co, it is considered to be more than all other geographical ride-hailing markets combined.
Last October, BMW said that it would be paying €3.6 billion (£3.2 billion) to raise its stake in a joint venture with Brilliance China Automotive Holdings, its Chinese partner, from 25 percent to 75 percent.
The move that was revealed today comes after a deal that was signed by Geely, a Chinese car manufacturing group, with Daimler, a rival German company, last month that aims to form a joint venture in the region for a luxury ride-hailing service.
It will be headquartered in Hangzhou, China and the 50:50 partnership will make use of Mercedes Benz E-Class, V-Class, and S-Class vehicles among others in a bid to differentiate itself as a luxury offering as compared to Didi.
Didi itself has been in hot water in China. Reportedly, a passenger was raped and killed by her driver last August. As a result, Didi said that it would plug 140 million yuan (£16m) into improving its customer service. It had suspended its carpooling service Hitch in the wake of the said incident.