BEIJING • China's Transport Ministry is planning to ban the use of private cars in online taxi-hailing services, in part to protect consumers and combat new competition for traditional operators.
Operators will need to obtain licences from the transportation authorities to provide online ride-booking services, and have local offices and China-based servers, under the proposed rules. The cars being used should be GPS-enabled registered taxis and drivers need to pass qualification tests, according to the draft posted on Saturday on the ministry's website to seek public comment.
China is considering regulations that would force ride-booking apps such as Uber and Didi Kuaidi to use commercially registered cars and drivers, and would let city governments limit permits for those services. The proposed framework will challenge the companies' current business model of signing up owners of private cars and matching them with riders.
The nation's 1.4 million traditional cabs are facing "unfair competition" from online ride-booking companies, the ministry said in a separate statement. Such companies are encouraged to upgrade their services using mobile-Internet technologies, while cars used by online operators will be barred from roaming the streets to collect passengers, it said.
Some operators used subsidies to gain market share and hired private cars in their services, "disrupting the normal market order and affecting the taxi industry and social stability", the ministry said.
Uber and Didi Kuaidi have spent heavily on subsidies for drivers and consumers to build a following.The companies continue to operate in an ill-defined area when it comes to enabling privately owned cars to provide paid transportation, a service traditionally confined to licensed taxis and rental companies.