Shared so­lu­tion

Rental car- shar­ing busi­ness bur­geon­ing amid dif­fi­cul­ties

Global Times - - Biz Insight - By Zhang Hong­pei

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.

Gain­ing speed

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.

Growth bar­ri­ers

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.

Photo: Cour­tesy of Go­fun

Shared ve­hi­cles of Go­fun are parked in one des­ig­nated park­ing space un­der the Guo­mao Bridge, Bei­jing in March.

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