(Yicai Global) Sept. 9 -- Shares of Chinese ride-hailing giant Didi Chuxing tumbled after China’s transport ministry said it will tighten supervision of the sector.
Didi [NYSE:DIDI] closed down 7.3 percent at USD8.98 in New York yesterday, after earlier dropping as much as 9.5 percent. The stock has declined 50 percent since the firm listed on June 30.
The ministry urged ride-hailing platforms to comply with the new regulations, which include disclosing the compliance ratio of cars and drivers on the platform on a regular basis, and ending the practice of penetration pricing, it said yesterday. The compliance ratios of such platforms in 36 key cities will be published monthly starting from this month, it added.
The ministry will punish ride-hailers for attracting new customers with lower prices when they start using their services, it said via its WeChat account, noting that platforms should cut their excessive commission rates and ensure reasonable remuneration and rest time for drivers.
Drivers not approved by local authorities are not allowed to register on ride-hailing platforms. But some of them still allow unqualified drivers and cars to do so, causing safety hazards.
The ministry and other departments summoned Didi and other 10 main ride-hailers in early September, asking them to correct vicious competition, and stop hiring unqualified drivers and using ineligible cars.
Seventeen ride-hailing platforms logged over 300,000 orders in July, according to the transport ministry data. TGAC Group’s Ruqi Mobility had an 89.5 percent compliance rate, the highest among the firms, while Didi-backed Huaxiaozhu had the lowest with at 23.6 percent.
Editors: Dou Shicong, Futura Costaglione