(Yicai) Jan. 18 -- China's ride-hailing market is showing signs of overcrowding as drivers report squeezed earnings after a wave of new chauffeurs signed up following a bump in orders last year amid the post-Covid economic recovery.

In the first 11 months of last year, some 6.4 million licenses were issued to drivers joining ride-hailing platforms nationwide, up 28 percent from a year ago, according to a regulatory platform. The number of vehicle transport permits increased by 32 percent to 2.7 million. 

Many cities have warned about the glut and paused issuing new licenses. For example, Sanya, a city in Hainan province famous for tourism, issued an alert last May, and Shanghai and Chongqing did the same in July and November, respectively. 

The post-Covid rebound in demand inspired new drivers to flock into the cities last year. The regulatory platform shows that in November, drivers received almost 8.3 million orders, a 62 percent year-on-year gain. But the sudden increase in available cars also resulted in squeezed incomes among drivers longer in the job.

About half of drivers only make CNY30 to CNY45 (USD4 to USD6) an hour, Ji Xuehong, director of a research center at Beijing's North China University of Technology, told Yicai. So after 10 hours working, each driver earns a median daily income of CNY380 (USD53). And that does not take into account costs such as fuel and food. 

But the pull of the gig economy is resilient. An increasing number of people are willing to become ride-hailing drivers amid the poor employment situation, Ji said, adding that such low-threshold jobs can absorb the excess supply of labor.

Working for a ride-hailing platform remains the best choice even though the job is quite exhausting, a Beijing-based contractor surnamed Chen said to Yicai. He came to the capital city last October, and earns CNY300 (USD42) by working a 16-hour day.

Another driver surnamed Zhang in the southern city of Foshan said that in the past year, his daily income fell by about 35 percent so he started working two or three hours more. In the past, there were three to four orders an hour but now it is down to two an hour on most days.

Given the economic backdrop, it will be hard for ride-hailing drivers to return to better income levels for some time to come, Ji predicted.

Editors: Tang Shihua, Emmi Laine