Yongche avoids discussing possible merger

No comment on reports of planned deal with Uber

A file illustration picture shows the logo of car-sharing service app Uber on a smartphone next to the picture of an official German taxi sign in Frankfurt, September 15, 2014. [Photo/Agencies]

The Chinese Internet car-sharing company Yongche Inc announced on Friday that it welcomes cooperation but there is no need to speak about a merger, in response to reports about a deal with Uber Inc. The announcement neither confirmed nor denied any possible merger.

Local media earlier cited investment bank insiders that Yongche has been in talk with Uber, from the United States, over the past three months regarding a possible merger. The report said a deal was expected to be announced last week and triggered much speculation.

The media communication departments of Yongche and Uber both declined to comment on the reported merger.

Both of the Internet companies run mobile-app based car-sharing services. Passengers' ride requests and drivers' positions are shared on the apps, and each may make choices based on displayed routes, time schedules, car models, estimated charges and reputation.

The service starts when the driver taps "start" after picking up the passenger, and ends when they arrive at their destination and the driver taps "end". The fare is charged automatically after the service is completed.

Uber was founded in 2009 and entered the Chinese market in 2014. It initiated the private car-sharing network concept in 2009 to link individual drivers directly with passengers. The California-based company takes a portion, roughly 20 percent, from the total fare for each ride.

Yongche, founded in 2010, runs the similar Chinese car-sharing mobile app Yidao Yongche. The company contracts with local car hire companies instead of individual drivers. The car hire companies contract and train the drivers. Yongche takes about 10 percent while the car hire companies make about 8 percent of the fare for each ride.

An iResearch Consulting Group research report issued last year said Uber's active users totaled more than 400,000 globally, despite it having only 300 cars in China in 2013. Yongche said its Yidao app has more than 100,000 vehicles, and more than 100,000 drivers last year.

In June 2014, Uber completed its E-round financing and agencies said it raised a total of $1.2 billion. It also inked a strategic investment agreement with Baidu Inc in December and received billions of yuan in investment.

In September 2014, Yongche received more than $100 million in its C-round financing, and now works with Ctrip, Haier, Baidu and Chery Automobile.

The mobile-based car-sharing market will keep expanding from 2015 to 2017, and these companies will harvest the surging growth in revenues and profits, according to iResearch's analysis.