After 6 years of inactivity, Gaode gets "involved" in Hitch: 0 commission, what's the plan?

Ride-hailing platforms collectively return to hitchhiking services.

In early September, the Gaode Maps app displayed a new hitchhiking service section on the Gaode Taxi page. This service is operational in 65 cities in three major regions: Hubei Province, the Pearl River Delta urban agglomeration, and the Yangtze River Delta urban agglomeration. To attract new car owners to join, the platform offers a maximum reward of 60 yuan to car owners.

As early as March 2018, Gaode briefly launched hitchhiking services, only to take down the business five months later. Coincidentally, T3 also recently opened the hitchhiking user registration function in some cities.

Now, the hitchhiking market is surrounded by strong competitors, not only including ride-hailing platforms such as Didi and Hello, but also vertical platforms like Dida. With market competition intensifying, is the hitchhiking market still a good choice?

Can the profit path be replicated?

In the first half of this year, the travel market witnessed a wave of IPOs. Companies like QiXing Travel, Dida Travel, and CaoCao Travel successively submitted prospectuses to the Hong Kong Stock Exchange, while Enjoy Travel under SAIC Group also indicated that it will prepare and initiate an IPO in the second half of 2024. Among them, Dida and QiXing successfully listed on the Hong Kong Stock Exchange in June and July this year, respectively.

From the disclosed prospectuses of various companies, it is not difficult to find that Dida, whose main business is hitchhiking, is one of the few profitable enterprises. Adjusted net profits of Dida Travel from 2021 to 2023 were 238 million yuan, 84.71 million yuan, and 226 million yuan, respectively.

On the other hand, CaoCao Travel and QiXing Travel, which rely on ride-hailing, continue to incur losses. From 2021 to 2023, CaoCao Travel incurred losses of 3.007 billion yuan, 2.007 billion yuan, and 1.981 billion yuan, totaling nearly 7 billion yuan over three years. During the same period, QiXing Travel incurred losses of 684 million yuan, 627 million yuan, and 693 million yuan, with a total loss exceeding 2 billion yuan.

Compared to ride-hailing, the profit potential of hitchhiking services cannot be ignored. Hitchhiking services operate on a light-asset model, where the platform does not need to bear the operating costs of its own fleet or leased fleet. Although the platform's commission is lower than that of ride-hailing, the operating costs are also lower. Moreover, with no need for significant marketing expenses, hitchhiking services are more likely to be profitable.

Compared to the saturated ride-hailing market, hitchhiking still has growth potential. A report from TF Securities shows that hitchhiking accounts for 1% of the domestic four-wheeled travel market. Although the market share is very small, the report predicts that, driven by demand, the hitchhiking market will be the fastest-growing segment market in the future. By 2025, the size of the Chinese hitchhiking market is expected to reach 113.9 billion yuan.

Profitability in the travel platform industry is challenging, and hitchhiking services seem to be a good remedy to boost profits. However, Gaode stated in 2018 that the company's involvement in hitchhiking services was not for commercial purposes, firmly against engaging in subsidy wars and commission extraction from users.

A reporter from Time Weekly contacted Gaode regarding the hitchhiking strategy but had not received a response as of the deadline. However, several hitchhiking drivers told the reporter from Time Weekly that Gaode currently does not charge commissions to car owners for hitchhiking, while the commission rate for hitchhiking on other platforms is mostly around 11% The Ministry of Industry and Information Technology's Information and Communication Economy Expert Committee member Pan Helin analyzed to a reporter from Time Weekly that for Amap, carpooling is a supplementary business, and the platform may hope to alleviate the capacity pressure during peak travel periods through carpooling.

"Carpooling may still be suitable for some small-scale demand scenarios. The reason why this business has great growth potential is because the previous market size was relatively small," Pan Helin said.

Commercialization of Map Navigation

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

Profitability is a challenge faced by global map navigation suppliers. The leading map navigation provider, Google Maps, also faces this dilemma. According to estimates by Tebod Research Institute, the global navigation map market (mainly including mobile and in-car terminals) is expected to reach approximately $20.4 billion in revenue by 2023. Morgan Stanley estimates that Google Maps' revenue in 2023 will reach $11.1 billion, accounting for about 54.4% of the total market.

Google Maps' revenue mainly comes from three major segments: advertising, O2O, and aggregated ride-hailing services. Advertising is the largest source of revenue for Google Maps, accounting for as high as 82% of its overall revenue in the fourth quarter of 2021. However, this revenue only accounts for about 5% of its parent company Google's advertising revenue. A Google Maps executive stated in 2021 that although the department has been established for over 15 years, commercialization is still in its early stages.

Amap has a large user base. Data from QuestMobile shows that in the first quarter of 2024, Amap had a monthly active user base of 801 million, ranking first in the map navigation field and fourth in the Chinese mobile internet industry, alongside WeChat, TikTok, and Taobao. However, compared to short video platforms, e-commerce apps, and other apps with almost the same user base, Amap's user engagement frequency is slightly lower.

In 2024, TikTok surpassed 700 million daily active users, Taobao surpassed 400 million daily active users, while Amap's officially disclosed stable daily active users are over 100 million, and even during peak travel periods like the Spring Festival, it can only bring Amap 280 million daily active users.

Industry insiders believe that unlike content and e-commerce platforms that can cultivate user consumption habits through the platform, Amap is a tool-type product for map navigation, where users leave after using it, making it difficult to establish an active commercial ecosystem.

In addition, map apps need to continuously collect map data, involving surveying qualifications, base map acquisition, satellite positioning, and other processes, leading to high operating costs. The "Intelligent Networked Vehicle High-Precision Map White Paper" disclosed in May 2021 shows that the cost of mapping per kilometer for high-precision maps is 1,000 yuan. According to data from the Ministry of Transport, as of the end of 2022, China's total road mileage has reached 5.35 million kilometers Only collecting road information, Amap has to bear a large amount of expenditure.

In recent years, Amap has been taking frequent actions. In order to establish an active commercial ecosystem, Amap has been continuously expanding its business boundaries, gradually transforming from a map software into an app that integrates travel, ticketing, social, and local life services. In September 2020, Amap launched "Amap Guide", targeting the hotel and travel, as well as food and beverage group buying businesses.

Subsequently, the integration between Amap and Alibaba's local life sector has become increasingly close. In 2021, Alibaba reorganized its organizational structure, combining Amap, local life, and Fliggy into the life services sector; in March 2023, Amap merged with Koubei, a brick-and-mortar business under Alibaba's local life.

On the other hand, Amap needs to explore new opportunities in light-asset businesses like ride-hailing. "For platforms that have non-core ride-hailing businesses, relying on ride-hailing for profits may not be the ultimate goal." Pan Helin analyzed to Time Weekly reporters, "Platforms may be more inclined to use the social attributes of ride-hailing to open up a new user entry point."

This method of breaking through by opening up traffic entry points seems familiar. In 2017, when Didi had already dominated the online ride-hailing market with absolute superiority, Amap avoided Didi's self-operated market and successfully captured nearly 30% of the market share by using maps as a traffic entry point, making the aggregated online ride-hailing business the most significant source of commercial revenue beyond advertising