Taxi competition acceptable but price war must end: professor

More than 3,000 cabs are lying idle in Nanjing, capital city of East China’s Jiangsu Province, allegedly due to the impact of online car services, representing a quarter of city-owned cabs, local news outlet Modern Express reported on Monday.

Nanjing taxi drivers began to quit in droves and started working as drivers for online car hailing services in 2017. Initially, there were around 1,000 city cabs without drivers, but that number has risen to 3,000 in just one year, Ling Qiang, the chief secretary of the Nanjing Taxi Association, told the media.

“It is an inevitable process that has resulted from the convergence of online and offline industries. Consumers prefer online car services, so the market made the call,” Zhu Wei, a professor from the China University of Political Science and Law, told the Global Times.

Some taxi companies have tried to hold on to drivers by cutting the monthly rent for the cars from the standard 7,200 yuan ($1,150) to the current 4,900 yuan, a drop of 32 percent. However, that has done little to reverse the trend, said report.

“Although the cars aren’t being used, the drivers are still working out there. The taxi companies may make less money, but the drivers who quit and work for online car services can get more income. It is a good thing,” said Zhu.

Data shows that in Nanjing, the average number of taxi trips fell 50 percent in 2018 compared with January 2017. As a result, the monthly income for cab drivers, who usually work 12 hours daily, fell from up to 6,000 yuan to around 4,000 yuan, according to Modern Express.

The report alleged fierce competition between online companies such as Didi Chuxing and Meituan Dache, which have significantly reduced their prices, is the main reason for the dwindling share of the traditional taxi industry in Nanjing.

“Such price war must be stopped by the government before causing harms to other companies and industries,” said Zhu Wei.