(Yicai Global) March 7 -- Meituan is discontinuing its stand-alone ride-hailing service and will cut investment in resources and manpower in this segment in order to return to an asset-light business model, but China’s largest on-demand service provider will still act as a hub for other hide-hailing platforms, The Paper reported.

The Meituan Dache app will move to the main Meituan platform, which offers a wide variety of life services from meal deliveries to restaurant bookings, founder, Chairman and Chief Executive Officer Wang Xing said in an internal email. The ride-hailing team will retain some staff but some people will be transferred to other departments.

Meituan needs to build its own fleet and invest heavily if it wants to run its own ride-hailing business, the report said, citing Pan Helin from Zhejiang University’s International Business School. By comparison, an information platform has much less capital pressure. The asset-light business model is popular with internet-based companies like Meituan, he added.

Meituan Dache has had a bumpy ride. It was first discontinued in 2019, after just two years in operation, when it failed to meet expectations. It was then relaunched with much fanfare in 2021 when sector giant Didi Chuxing’s app was temporarily suspended from app stores due to the improper use of consumer data. Since then Meituan Dache has carried out business in more than 100 cities, including Beijing, Shanghai, Guangzhou and Shenzhen.

The Beijing-based firm has long offered the integrated ride-hailing model, where it serves as a hub for other platforms. In 2019, it piloted the service in 15 cities through which people could call a cab from other ride-hailing platforms such as Shouqi Yueche, Caocao Chuxing and Shenzhou Zhuanche using the Meituan app.

Meituan’s share price [HKG:3690] was trading down 3.2 percent at CNY138.20 (USD20) as of 2 p.m. China time today.

Editor: Kim Taylor