An Uber-Bolt Duopoly Forced DiDi’s Demise From South Africa

On March 1, 2021, SoftBank-backed DiDi Chuxing, one of the world’s largest mobility companies, rode on its fame and impact to debut in Cape Town, South Africa. The service’s launch in the country marked the ride-hailing giant’s first African expansion and its 17th market entry globally. For many reasons, this drive-in renewed interest in private transportation in terms of [heating up] competition. 

Some five months later, DiDi doubled down on its operations, making inroads in three more locations, the Gauteng cities of Joburg, Pretoria, and Ekurhuleni. Generally, the company broke into the South African market with an arsenal of features aimed at increasing the safety levels of drivers and riders alike. It was a welcome development given the safety issues previously faced by similar service patrons. 

DiDi’s starter pack comprises dangerous zone notifications, which are designed to automatically help its drivers geo-block potentially unsafe environments. 

The company also made provisions for safety toolkits for both drivers and riders, conducted background checks and threw in a passenger verification system. DiDi also made it possible for trips to be recorded, reinforcing its intentions to improve partakers’ experiences. 

Notwithstanding, DiDi was not driving into a market void of aggressive competitors. In fact, launching in South Africa fully involved going head to head with Uber and Bolt, both of whom are bigger players by virtually all standards. Besides, these ride-hailing firms have been in the market for a few years [2013 and 2015, respectively] and have become quite popular among riders/passengers. 

Interestingly, South Africa is not the first market DiDi is competing with Uber. Roughly six years ago, Uber entered the Chinese market to the glare of DiDi.

The mix created the kind of competition which led to a series of ride subsidy wars, with a seemingly stronger play on Uber’s side to challenge DiDi’s dominance. Nevertheless, after all done and undone, Uber failed to usurp the incumbent champion, pumped its brakes on China and altogether offloaded its business into DiDi’s possession. 

In the South African market, the narrative is quite different. After roughly a year of competing with not only Uber but also Bolt (formerly Taxify), DiDi has come up short. In a recent release, the company announced that it is pulling over its drive in the country for the sake of conserving resources that would prove useful to its cause in elsewhere African markets. 

“We have made the difficult decision to end our operation in South Africa from April 8,” a Didi South Africa spokesperson said to TechCrunch. “We have aimed to ensure a smooth transition for all, and [we] would like to take this opportunity to thank our employees, drivers, riders, and partners for the kindness and support shown to DiDi, ” the company’s parting statement read. 

The South African market, which happens to be the continent’s most industrially advanced economy, was supposed to be a major boost for DiDi, mostly due to how people have responded to ride-hailing. The expansion was also geared towards improving its valuation in order to hit a blockbuster USD 100 B IPO on the New York Stock Exchange (NYSE); the company is currently valued at USD 60 B, with over USD 20 B raised since its inception in 2012. 

According to data from App Annie, Uber has about 5.3 million users in South Africa, while Bolt has 2.1 million. The former dominates the market by sitting on 71 percent, followed by Bolt’s, which has a 28 percent share. Since almost 99 percent of the ride-hailing market is under the Uber-Bolt duopoly, there is hardly any room left for DiDi to prove its case. 

Presently, Uber claims to be present in all SA cities and Bolt, which already has not only similar coverage but also a food delivery arm, has started rolling out electric and hybrid vehicles—additional indications of their stronghold. 

Coming after Uber, which is valued at USD 80.1 B, DiDi is said to be the second-largest ride-hailing company known today. There is [certainly] no shortage of firepower, but it does appear that the service lost the battle for South Africa and is setting its sights on Nigeria, unarguably a market with a less penetrated e-hailing landscape. 

Be as it may, the ride-hailing scenery of the country has been embroiled in disquiet, and this might have as well played a role in DiDi’s shuttering. 

Late last month, a major urban protest shook South Africa, when drivers and driver-partners took to the streets with placards and signposts to demonstrate their dissatisfaction with the state of affairs in the country’s ride-hailing industry. The protesters held contempt against the unfavorable treatment said to be the everyday struggles that come with working for/with e-hailing companies.

Drivers earning a livelihood on Uber, Bolt and Didi have repeatedly complained about the inadequacies troubling South Africa’s e-hailing sector, namely high commission rates, safety concerns and the absence of complementary insurance schemes, among others. But, on Tuesday, March 22, a nationwide strike took place, unavoidably leading to a hike in trip prices and leaving unsuspecting drivers stranded. 

Drivers going offline for an entire day and protesting against the government’s interference result from longstanding clamor for the industry’s labor force to be more incentivized. 

Because there is little to no legislation overlooking the local operations of these international ride-hailing actors, their activities have gone colossally unchecked. 

“We are against exploitation and uneconomic prices imposed on us by app companies. The app companies determine our prices against operational costs, then downgrade our cars and still charge us exorbitant commissions of 25 percent to 26 percent. Through this protest, we hope the prices are reviewed upwards and have the elephant in the room, ‘commission’ reduced to 10 percent without fail,” one protester said.