Uber and Didi Chuxing Go Head to Head in Mexico

Didi is launching its ride-hailing service in one of Uber's biggest markets.

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Chinese firm Didi Chuxing is now offering its ride-hailing service in Mexico, reports Reuters, one of rival Uber's biggest markets. It's the first time the two companies have competed directly since Uber sold its Chinese operations to Didi in 2016.

Didi's Mexican launch, which has been reported for several months, marks the first time the company has operated its ride-hailing service in a country outside of Asia. Mexican operations are currently limited to the city of Toluca, about 40 miles west of Mexico City, but Didi is expected to expand to other cities later this year.

The company began recruiting drivers in Toluca earlier this month, according to Reuters. As an incentive, Didi said it would not begin taking a cut of drivers' fares until June 17. At that time, Didi will take a 20 percent cut, a bit less than the 25 percent cut Uber takes from driver fares.

Mexico is a crucial market for Uber. The U.S. company claims to have seven million users in the country, and operates in 45 Mexican cities. Mexico City is Uber's third-largest market in terms of rides, after the Brazilian cities of Sao Paulo and Rio de Janeiro.

Recently, Uber has ceded some international markets to rivals in order to concentrate on a smaller number of core markets. Uber sold its Chinese operations to Didi in 2016, and sold its Russian operations to local tech company Yandex last year. Southeast Asian ride-hailing company Grab was set to buy Uber's operations there, but the deal has been held up by regulatory issues.

Given how important Mexico is to its bottom line, it seems more likely that Uber will fight Didi rather than sell out. But the company may be battling Didi on two fronts. The Chinese firm recently bought Brazilian ride-hailing company 99, giving it a beachhead in another one of Uber's biggest markets.