(Yicai Global) July 24 -- Shanghai has stopped accepting applications for new ride-hailing permits because the local market for such services is fast approaching saturation point. Other Chinese cities have already done so.

Applications will no longer be accepted from July 22, the city’s road transport authority said the previous day. Any applications submitted before that date will be processed, with the last batch issued before Sept. 20, it added.

Other cities made similar announcements earlier this year. Sanya in Hainan province suspended the issuance on May 5. Zhuhai, Jinan, and Suining followed suit to also prevent their markets from becoming too overcrowded.

A pause in issuance will not have a major impact on people getting around Shanghai because the city has about 76,000 vehicles with ride-hailing permits and 50,000 taxis, the local stransport authority noted.

The sector is entering a stable phase after fast growth, Ji Xuehong, director of the auto industry innovation research center of North China University of Technology, told Yicai Global, adding that the market is already overcrowded in some places.

Drivers’ incomes and the sector’s attractiveness will decline once the market reaches saturation point, Ji noted.

Competition is heating up, forcing drivers to work longer hours to earn the same amount as before, according to some in Shanghai. One told Yicai Global that he drives about 10 hours a day for an average daily gross income of about CNY500 to CNY600 (USD70 and USD84).

As of June 30, there were 5.8 million licensed ride-hailing vehicles across China, up nearly 66 percent from two years ago, according to data on the transport ministry’s ride-hailing services regulatory information platform. Some 2.4 million new permits were issued over the period, an jump of 83 percent.

Bookings hit 763 million last month, up only 20 percent from a year earlier and 8.8 percent from the same period in 2021, the platform’s data also showed.

Editors: Tang Shihua, Futura Costaglione