The new ride-hailing platform, T3 Chuxing, is the newcomer to China's already congested ride-hailing industry.

Backed by two Chinese tech behemoths Alibaba, Tencent, and the retail giant Suning, the new startup has three stellar partners – state-owned automakers Changan Automobile, Dongfeng Motor Corporation, and China FAW Group.

Unlike the industry leader Didi Chuxing, which relies on private-owned cars and contractor drivers, T3 Chuxing has its own fleet of vehicles and all drivers are considered employees of the company instead of contractors. First launched in Nanjing, it plans to expand its service to another five cities in China. 

The launch of T3 Chuxing comes at a time when the Chinese auto industry is experiencing sluggish growth. After 20 years of continued growth, the sales figure for automobiles dropped for the first time in 2018, falling 6 percent to 22.7 million units. The ride-hailing industry in China, on the other hand, is a multi-billion-dollar industry, with the total number of users stand at 285 million.

"The launch of T3 Chuxing is more out of strategic consideration than short-term profit-making," Ran Chuangchuang, analyst at iResearch, told CGTN, noting that foreign automakers including Dailmer, BMW, and Toyota have invested in ride-sharing, in a bid to offer transport as a service to consumers who do not own cars.

"As car sales hit the ceiling and profit margin gets thinner… ride-hailing, in comparison, is a much more constant and stable need that consumers have," Ran added. "Automakers are in search of areas that hold growth potentials."

Didi Chuxing, the unquestionable leader in the industry, has been beset by security scandals since last year. Murder cases of female passengers by Didi Hitch drivers were a huge blow to the company's reputation, leading to a permanent shutdown of its hitchhiking service in the immediate aftermath of the tragedy and installation of security features on the ride-hailing platform.

And this is probably where the advantage of T3 Chuxing lies in. "It can provide more standardized and better service since it relies on its own cars and drivers," Ran told CGTN.

In a press conference, CEO of T3 Chuxing, Cui Dayong, said that facial recognition technology to verify the drivers' identity would be installed in all of the T3 Chuxing's cars, on top of strict background check of the drivers and GPS tracking of the vehicles.

But scaling the business can be challenging, Tu Le, managing director of Sino Auto Insights, an auto consultancy firm, told CGTN. "Automotive companies aren't really known for their speed so they'd likely be much slower to react to sudden changes to the market than their tech startup competitors."

Didi Chuxing now holds the overwhelming majority market share in China's ride-hailing industry but its dominance did not come easy. 

Through an intensive cash-burning competition, it knocked out Uber from the market, though it liked to frame its success story as one of partnership with Uber instead of competition against Uber. It offered generous subsidies for both drivers and users at the beginning, quickly capturing great market share in the nascent industry.

But the generous subsidies brought staggering loss. In an internal letter to employees, co-founder and CEO of Didi, Cheng Wei said that for six years since its founding in 2012, Didi had been unprofitable. 

"Neither side will be profitable for quite some time, years likely, and Didi will need to raise more capital to stay competitive," Tu from Sino Auto Insights cautioned.

Right now, T3 Chuxing does not want to position itself as in direct competition against Didi. According to the CEO of T3 Chuxing, Cui Dayong, given that ride-hailing is a multi-billion-dollar industry in China, "it is very hard for any single company to do well in the industry… and we welcome all forms of cooperation."