BEIJING • The Chinese authorities announced a broad crackdown on China's ride-hailing industry yesterday, targeting market leader Didi Chuxing with fines following the deaths of two passengers in separate incidents earlier this year.
Didi has violated multiple safety rules, presenting a "major safety hazard", including failing to properly flag high-risk drivers and improperly handling deposits, China's Ministry of Transport said in a notice on an official social media account.
"The driver's qualifications and background checks are not in place. The company's management of people and vehicles is out of control," it said, referring to Didi, which accounts for about 90 per cent of China's ride-hailing market.
It said it would "severely crack down" on ride-hailing firms hiring illegal drivers and fine Didi's executives and legal representatives an undisclosed amount of money.
Didi, backed by Japan's SoftBank Group Corp and the world's top ride-hailing firm Uber, drew widespread criticism on social media earlier this year after two women were assaulted and killed in separate incidents involving drivers using its carpool service, Didi Hitch.
In one of the incidents, the driver was able to circumvent safety controls on Didi's app to use a relative's account, despite being previously flagged for harassment.
Clocking roughly 30 million rides a day, Didi is the world's No. 2 ride-hailing firm, behind Uber. But it has lately been struggling to counter a marked increase in wait times in large Chinese cities, where residence restrictions on drivers as part of a broader push to regulate the industry have slashed the number of available rides.
The ministry said there are still a large number of illegal cars and it will urge the local authorities to target unqualified drivers, which could exacerbate the shortages.
Didi's business has already been impacted by the suspension of its carpooling service that was advertised by Didi as a way to meet people. The authorities said yesterday that the suspension of Didi Hitch would continue indefinitely.
To help rebuild consumer trust, Didi has said it will expand its in-house customer service team as part of a wider upgrade.