6 years after the ignition was turned off, AutoNavi was "involved" in a hitchhiker: 0 commission, what are you doing?

Source of this article: Times Weekly Author: Shen Jinrui

Source: Pixabay

Ride-hailing platforms collectively returned to the ride-hailing business.

At the beginning of September, AutoNavi Map App showed that a new hitchhiking business section was added to AutoNavi's taxi page. The business has been operated in 65 cities in Hubei Province, the Pearl River Delta urban agglomeration and the Yangtze River Delta urban agglomeration. In order to attract new car owners to join, the platform gives car owners a reward of up to 60 yuan.

As early as March 2018, AutoNavi briefly launched Hitch, and then removed the business five months later. Coincidentally, T3 has also recently opened the hitchhiking user registration function in some cities.

Nowadays, the ride-hailing market has been surrounded by a large number of ride-hailing platforms, in addition to online ride-hailing platforms such as Didi and Haro, there is also no shortage of ride-hailing vertical platforms such as Dita. As the market becomes increasingly competitive, is the ride-hailing market still a good choice?

Can the monetization path be replicated?

In the first half of this year, the travel market ushered in a round of listing boom. Ruqi Travel, Tick Travel, and Cao Cao Travel have successively submitted prospectuses to the Hong Kong Stock Exchange, and Xiangdao Travel, a subsidiary of SAIC Group, also said that it will prepare and launch an IPO in the second half of 2024. Among them, Tick and Ruqi successfully landed on the Hong Kong Stock Exchange in June and July this year respectively.

It is not difficult to find from the content of the prospectus disclosed by each company that Tick, which has hitchhiking as its main business, is one of the few companies that has achieved profitability. From 2021 to 2023, the adjusted net profit of Tick Travel will be 238 million yuan, 84.71 million yuan, and 226 million yuan respectively.

On the other hand, Cao Cao Travel and Ruqi Travel, which rely heavily on online car-hailing, continue to lose money. From 2021 to 2023, Cao Cao's losses will be 3.007 billion yuan, 2.007 billion yuan, and 1.981 billion yuan respectively, with a cumulative loss of nearly 7 billion yuan in three years. In the same period, Ruqi Travel lost 684 million yuan, 627 million yuan and 693 million yuan respectively, with a cumulative loss of more than 2 billion yuan.

Compared with ride-hailing, the profit potential of ride-hailing cannot be ignored. The ride-hailing business is an asset-light business model, and the ride-sharing business platform does not need to bear the operating expenses of its own fleet or leased fleet, although the platform commission is lower than that of online ride-hailing, but the operating costs are also low. In addition, there is no need to invest large sums of money in the market, and the ride-sharing business is easier to achieve profitability.

Compared to the already saturated ride-hailing market, ride-hailing still has growth potential. Tianfeng Securities report shows that in the domestic four-wheeled vehicle travel market, hitchhiking occupies a 1% share, although the share is very small, but the report predicts that under the pull of demand, the future hitchhiking market will be the fastest growing market segment, by 2025, China's hitchhiking market size will reach 113.9 billion yuan.

It is difficult for the mobility platform to make a profit, and the ride-hailing business seems to be a good medicine to boost profits. However, AutoNavi said in 2018 that the company did not engage in the ride-hailing business without any commercial purpose, resolutely did not fight a subsidy war against the industry, and resolutely did not take commissions from users.

A reporter from the Times Weekly contacted AutoNavi about the strategic planning of hitchhiking, but did not receive a reply as of press time. However, a number of hitchhiker drivers told the Times reporter that at present, AutoNavi Hitch does not charge commissions to car owners, while most of the hitchhiking commission rates on other platforms are about 11%.

Pan Helin, a member of the Information and Communication Economy Expert Committee of the Ministry of Industry and Information Technology, analyzed to the Times Weekly reporter that for AutoNavi, hitchhiking is a supplementary business, and the platform may hope to alleviate the pressure of capacity during peak travel periods through hitchhiking.

"Hitchhiking may still be suitable for some small-scale demand scenarios, and the reason why the business has a lot of room for growth is because of the small base of the previous market size." Pan and Lin said.

Commercialization of map navigation pathfinding

Alibaba's latest financial report shows that the operating conditions of local life groups, including AutoNavi, have improved, but they are still in a loss-making state. According to Alibaba's financial report for the first quarter of fiscal year 2025 (the three months ended June 30, 2024), local living group's year-on-year revenue increased by 12% to 16.229 billion yuan, and the adjusted EBITA (profit and loss) loss continued to narrow to 386 million yuan from 1.982 billion yuan in the same period last year.

It is difficult to make a profit, which is a problem faced by map navigation providers around the world. Google Maps, the leading map navigation company, is also facing this problem. According to the estimation of the Tabor Research Institute, the revenue of the global navigation map market (mainly including mobile phones and car terminals) will reach about 20.4 billion US dollars in 2023. Morgan Stanley estimates that Google Maps will generate $11.1 billion in revenue in 2023, accounting for about 54.4% of the total market.

The revenue of Google Maps is mainly composed of three major parts: advertising, O2O, and aggregator ride-hailing. Advertising is the largest source of revenue for Google Maps, accounting for 82% of its overall revenue in the fourth quarter of 2021, however, this part of the revenue is only about 5% of the advertising revenue of its parent company, Google. The person in charge of Google Maps said in 2021 that although the department has been established for more than 15 years, commercialization is still in its infancy.

AutoNavi has a large user base. According to QuestMobile data, in the first quarter of 2024, AutoNavi Map's monthly active users will be 801 million, ranking first in the map navigation track, ranking fourth in China's mobile Internet industry, and in the same echelon as WeChat, Douyin, and Taobao. However, AutoNavi, which has almost the same user scale as short video, e-commerce and other apps, has a slightly inferior user frequency.

In 2024, Douyin's daily active users will exceed 700 million, Taobao's daily active users will exceed 400 million, and AutoNavi's daily active users will be officially disclosed as "stable over 100 million", and even a travel peak like the Spring Festival can only bring 280 million daily active users to AutoNavi.

Industry insiders believe that unlike content and e-commerce, which can cultivate users' consumption minds by virtue of the ecology established by the platform, AutoNavi is a map navigation tool-based product, and it is difficult to establish an active business ecology when users run out.

In addition, map apps need to continuously collect map data, which involves surveying and mapping qualifications, base map acquisition, satellite positioning and other links, and the operating costs are high. According to the White Paper on High-Precision Maps for Intelligent Connected Vehicles disclosed in May 2021, the cost of high-precision maps is 1,000 yuan per kilometer. According to data from the Ministry of Transport, by the end of 2022, the total length of roads in China reached 5.35 million kilometers. Just collecting road information, AutoNavi has to bear a large expense.

In recent years, AutoNavi has made frequent moves. In order to build an active business ecosystem, AutoNavi continues to expand its business boundaries and gradually transform from a map software to an app that gathers travel, ticketing, social networking and local life. In September 2020, AutoNavi released the "AutoNavi Guide", which refers to the group purchase business of wine tourism and catering.

Since then, AutoNavi has become more and more closely bound to Alibaba's local life sector. In 2021, Alibaba adjusted its organizational structure and formed AutoNavi, Local Life and Fliggy into a life service sector; In March 2023, AutoNavi merged with Koubei, the in-store business of Ali Local Life.

On the other hand, AutoNavi needs to open up new space for asset-light businesses such as hitchhiking. "For platforms that are not mainly engaged in the ride-sharing business, relying on ride-sharing to make a profit may not be the ultimate goal." Pan and Lin pointed out to the Times reporter that the platform may be more inclined to open a new user entrance through the social attributes of hitchhiking. ”

This way of breaking through by opening up traffic entrances is familiar. In 2017, when Didi had already dominated the online car-hailing market with its absolute advantage, AutoNavi avoided Didi's self-operated market and used maps as the traffic entrance, successfully winning nearly 30% of the market share, making the aggregate online car-hailing business the most important commercial income in addition to advertising.