Rental car- sharing business burgeoning amid difficulties
With a boom in shared economy supported by national policy, rental car- sharing business has rapidly emerged as a part of the public transport system in Chinese cities in the last two years. But, while demand is rising, firms engaged in the rental operation are also facing an array of bottlenecks such as high operational costs and limited parking or charging facilities. Experts suggest firms should adopt a collaborative strategy to survive and thrive in the sector, which is projected to be a future trend featuring self- driving technology.
Sitting in a rented white Peugeot car, Jia Rui, a Beijing resident who often keeps a busy schedule of business meetings, is paying the usage fees on a car- rental app through his mobile phone. Different from traditional car rental services, this vehicle belongs to short- term rental service, known as car- sharing.
Much like shared bikes, users can directly scan QR ( quick response) codes to unlock a car or book it in advance, then park it when the trip is completed and end the charging, which is usually based on mileage plus time of usage.
There are currently two ways to find shared cars for renting – stationbased cars parked on designated spots and the free floating ones.
For the specific order Jia showed the Global Times, it cost him a total of 50 yuan ($ 7.57) for a 93- minute trip of 9.4 kilometers.
Having participated in Beijing’s vehicle lottery for more than three years, Jia is yet to become a lucky winner to get the car license plate.
In Beijing, the State- run lottery system refreshed its record in the latest round, with 854 people scrambling for one car plate, according to local media reports.
“The car- sharing model has really brought convenience to my working life although there are still some problems such as the long distance to find a car, high parking fees despite the partial refund by the platform and untidy environment inside the car,” Jia noted.
At present, there are about 100 companies nationwide engaged in operating the rental car- sharing business, Shu Liang, an industry watcher and managing partner at Shanghaibased Estar Capital, told the Global Times on Monday.
“Having developed slowly since 2011, car- sharing model leaped into the public spotlight in the past two years in China thanks to a boom in the shared economy, especially bike- sharing, which has had an obvious influence on popularizing car- sharing,” Shu said.
New- energy vehicles ( NEVs) take the lion’s share of the shared cars, with about 6,000 electric vehicles operated by 37 car- sharing companies currently in Beijing, Shanghai, and Guangzhou, capital of South China’s Guangdong Province, according to statistics from Beijing- based research consultancy Analysys.
The number of active users in the car- sharing business reached over 2 million across the country in June, up 10.53 percent from previous month, data from Analysys showed.
After a six- year exploration, the car- sharing segment has also won policy support, with the Ministry of Transport and the Ministry of Housing and Urban- Rural Development jointly releasing the guideline on the sound development of shared cars on August 8.
The policy confirms the active role the car- sharing model is going to play in reducing the desire for car ownership which requires large resources of road and parking space, as well as alleviating traffic congestion in cities.
Different from traditional car- rental business, the car- sharing model has made innovation in services, technology and management, improving users’ experience and adding another option for city travel, the guideline said.
Backed by the policy dividend and inevitable trending of NEVs in China, various players are striving to stay at the forefront of the game, including Internet start- ups, traditional car makers and operators.
“At the moment, companies are busy gaining market share and cultivating demand in a bid to win collective recognition of the new travel mode,” Shu said.
Luo Hanxin, marketing manager of Beijing- based car- sharing company Togo, agreed with Shu.
He told the Global Times on Tuesday that Togo’s major tasks are to gain users and educate the market instead of concerning about the profitability. Togo has put 5,000 gasoline cars onto the market in big cities including Beijing, Shanghai, and Guangzhou and is also considering the introduction of NEVs into the market.
Gofun Chuxing, an NEV- sharing service platform under State- owned car- rental and taxi firm Beijing Shouqi Group, has expanded its operations to 21 domestic cities, with more than 12,000 cars nationwide at present, according to a note the company sent to the Global Times on Tuesday.
An industry report released in June by US consultancy Strategy&, a subsidiary of PricewaterhouseCoopers, said that the total scale of shared cars in China is estimated to surpass 170,000 by 2020 with the transaction volume reaching 4.7 billion yuan.
Li Yanxia, associate research fellow at the China Academy of Transportation Sciences, told the Global Times on Monday that domestic car- sharing industry is at a nascent stage currently, with a fragmented market, small scale and weak network operation.
For example, car- sharing operators that offer station- based cars have much room to improve the information management, which will allow a timely dispatch of service staff, thus saving time for users, said Li.
The small scale of vehicles also presents a bottleneck for car- sharing platforms in terms of reducing costs, which usually includes cost of vehicle, operational expenses, battery charging or fuel and parking fees, according to Shu.
“Most car- sharing platforms are still at an investment phase since vehicles require huge asset investment… therefore continuous funding is a crucial factor for these players to survive,” Shu noted.
Beijing Youyou Lianchuang Information Technology, a car- sharing company, was unable to sustain its business in March because an investment deal agreed upon last year was not received as expected, media reports said.
Another operator EZZY, which is focused on sharing premium cars such as Audi and BMW in Beijing only, told the Global Times that its daily order per vehicle has reached seven to eight, basically breaking even, according to a person related with EZZY.
Besides the high operational costs, limited public facilities such as parking lots and charging stations are also problems users have highlighted on social networks.
An inevitable trend
“As pointed out in the government’s car- sharing guideline, operators are encouraged to seek strategic cooperation or merger with other partners to enlarge their business and bring down the costs,” Li said.
According to Shu’s forecast, some car- sharing companies will stand out from the competition and become leaders in the sector in the next two or three years.
“Under the favorable environment of shared economy, consumers’ focus has gradually shifted from ownership to usage right,” Tan Yi, chief operating officer at Gofun, said in the note.
With self- driving technology becoming more mature and consumers’ consciousness leaning on usage, shared vehicles with self- driving technology will become the future trend, Tan noted.
Shared vehicles of Gofun are parked in one designated parking space under the Guomao Bridge, Beijing in March.