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Volkswagen in talks to form joint venture with Didi Chuxing

Volkswagen is in talks to establish a joint venture with China’s Didi Chuxing to manage part of the ride-hailing company’s fleet of vehicles and assist with development of “purpose-built” vehicles for Didi’s services.

As part of the deal between Volkswagen and China’s biggest ride-hailing service, anticipated to be signed early next month, the German automaker will initially manage a fleet of around 100,000 new vehicles for Didi, of which two-thirds will be Volkswagen Group cars, stated a senior executive at the automaker.

Volkswagen will also jointly buy some new vehicles with Didi to permit the Chinese company to broaden its fleet. The two eventually plan to collaborate to design and develop dedicated vehicles, he stated, discussing on condition of anonymity as the information is still private.

The executive did not provide financial details of the deal but stated that Volkswagen will get a slice of the earnings once the venture develops.

The rising popularity of ride-hailing services for commuting and running errands in populated cities such as Beijing and Shanghai is showing early indications of lowering private car ownership. This could have severe consequences for present auto makers and is forcing companies such as Volkswagen to reinvent their businesses and look forward to future revenue streams.

“To succeed as a car company in this new ecosystem, we need to know who our customer is, what their journey is and what our strategy should be,” the executive stated.

He added that this deal will eventually provide Volkswagen access to some of Didi’s massive trove of data on customer behavior gathered through the 3 million rides Didi provides in China on daily basis.

The ultimate goal is the production and utilization of autonomous cars, the Volkswagen executive informed.

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