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New company DiDi says it will improve the Auckland rideshare industry. (Photo: Lucy Fox)
New company DiDi says it will improve the Auckland rideshare industry. (Photo: Lucy Fox)

BusinessNovember 16, 2020

Will DiDi bring meaningful change to the rideshare industry?

New company DiDi says it will improve the Auckland rideshare industry. (Photo: Lucy Fox)
New company DiDi says it will improve the Auckland rideshare industry. (Photo: Lucy Fox)

International rideshare company DiDi launched in Auckland last week, promising cheaper fares and better takes for drivers. But is the newest player to the rideshare game offering lasting solutions to the industry’s woes?

For weeks, rideshare drivers been promoting DiDi by handing out coupons to Uber and Ola customers, encouraging them to download the app. They’re endorsing DiDi before they’ve even started driving for it, motivated by the new brand’s cash-for-referrals scheme. 

It’s all to do with the distinctive market strategy of the newcomer to New Zealand, which started in China in 2012 and now makes 10 billion passenger trips per year with over 550 million users globally. Australasian company spokesperson Dan Jordan says DiDi’s approach will make ridesharing more affordable in Auckland by offering serious discounts and pressuring other rideshare apps to follow suit. DiDi is passionate about supporting its workers and riders, he says: as well up to 10% more affordable than other brands, DiDi offers an industry-leading average service fee, meaning drivers take home more of the fare – up to 95% – than in other companies. 

“We also provide incentives for when we come into the market. So for instance, drivers will drive with a 5% services fee for the remainder of the year,” he says. “We have a really strong referral programme, so drivers can earn up to $5000 each if they successfully refer 300 riders to DiDi. [We’re] trying to find ways that we can really support the driver community entering the market.”

Dan Jordan, spokesperson for DiDi. (Photo: Lucy Fox)

But DiDi’s promotion is also targeting customers, offering everyone who signs up free vouchers and discounts, including the offer of a free ride for its first four Saturdays of operation. 

“It’s great that we can come in and make ride-sharing more affordable in Auckland, up to 10% more affordable than comparable services, but then also being able to importantly provide greater support for New Zealand’s driver community,” Jordan says.

The enthusiasm among drivers certainly seems to be there. The company has cemented itself as a market leader in Australia, and Jordan has previously said the company estimates it has signed up about 80% of Auckland’s active rideshare drivers, most of whom already drive for Uber and Ola.

So with higher driver pay, and cheaper rates, DiDi appears to be the kind of ethical company the rideshare market has been waiting for. But is it actually proposing meaningful solutions to the many issues plaguing the industry? Based on the inherent nature of the rideshare model, not everyone is convinced.

Anita Rosentreter, strategic project coordinator for First Union, says rideshare companies purposefully distance themselves from drivers by working with them as contractors. This enables them to avoid responsibilities of being an “employer”, such as paying minimum wage, sick leave and KiwiSaver.

Drivers say there’s often a lack of support and communication from the platform they use, she adds.

“The companies try and deliberately keep the drivers at arms’ length, because the more they interact and the more they accept responsibility for work related things, the more they’re displaying that these people probably should be employees rather than contractors.”

These issues were highlighted in a recent Employment Court case between Uber and a former driver, in which the driver’s legal team argued that the dominance and control Uber exerted over the driver indicated that he wasn’t in business for himself, and therefore should be considered an employee.

Didi’s Jordan, however, says his company’s drivers have not expressed any concern about being treated as independent contractors. In any case, he says drivers’ status as independent contractors gives them freedom, and rideshare brands like DiDi must support their drivers to ensure the drivers still support them. 

“Drivers can drive across multiple platforms, so we have to ensure that we treat our drivers with the utmost respect and increase their earning potential so they drive and continue to operate on the DiDi platform. “There’s no one thing, we have to make sure that we support our driver community in all areas, so they continue to support us.”

Many rideshare drivers sign up for all the rideshare apps. (Photo: Getty Images)

Rosentreter is also wary of the promised higher driver rates. Based on the rideshare industry’s track record, she says drivers’ margins may be temporarily squeezed and then – once DiDi has solidified its place in the Auckland rideshare market – the company may decrease the drivers’ take-home fee.

Rideshare companies are able to do this because their drivers are not employees. Employees in New Zealand are protected by the Wages Protection Act which by law prohibits employers from decreasing workers’ pay. When drivers are not employees, they lose this certainty, which can happen without any warning or agreement, says Rosentreter.

“We’ve seen it before where [new rideshare brands] come in and all offer these great things, and then turn around and lower them. Because they’ve just given themselves that much power.”  

Rosentreter says drivers have some autonomy in being able to pick and choose which apps they drive for, but most apps behave in the same way. Drivers often drive for more than one app because they are not making minimum wage and struggle to get 40 hours of work each week. 

It’s out of desperation that they’re signing up to each different one, to try and get as much work as possible, to try and get as much income as possible. 

While she does not know how DiDi will get on in the Auckland market, Rosentreter says in her experience, all apps follow a similar model. They might offer deals that benefit drivers and riders for a limited period of time, but always as a marketing tool to establish a point of difference from other apps rather than committing long term to driver rights. 

She says it would be great if one of the rideshare brands agreed to work with First Union to establish minimum pay and conditions, if they were really serious about looking after their drivers. 

“But our feeling so far is they benefit from misclassifying these workers as contractors, and that’s precisely the business model they’re after,” she says.

Rosentreter says DiDi’s dedication to their drivers and customers will become clear over time, but she does not expect much to change. 

“If they’re all participating in a race to the bottom on fares, it’s very likely they’re also participating in a race to the bottom on wages. Basically, if the money isn’t coming in, then the drivers aren’t going to be getting it.”

Earlier this year, First Union submitted to the government while they were undergoing a consultation process into legislative options to fix these issues. Rosentreter says she hopes they prioritise it, as the increase in redundancies from Covid-19 means more and more people are having to settle for precarious work.

She says many of these people who are used to more secure, traditional employment are signing up to drive for rideshare companies, “without really understanding what they’re signing up for, or what they’re signing away”.

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