NEWS AND INSIGHT

Sharing Economy – Chinese Car Sharing Market

2015-03-27

Last week, one of my close friends in college told me he would come to Shanghai for a visit during the weekend. I decided to rent a car to take him to the tourist attraction at the nearby suburb in Shanghai called “Zhujiajiao”, Shanghai’s Venice.
 
I considered the car rental platforms I previously used first, 1hai, Hertz, and Avis specifically. I entered the date I would like to rent the car, type of car, price range and pick-up location etc. Then the platform automatically filtered out several options. One car caught my eye, the KIA K5, but it had already been booked. I felt sad, but determined to rent this car. I started to search other platforms. A car sharing platform called “AT Zuche” came to mind. I put “KIA K5” into the search engine and out came a list of this type of car. I called their customer service and booked the car successfully.
 
Through the experience of booking and using their service afterwards, I found many new features from this car sharing platform.
 
Free pick-up service
Better car condition 
20% to 30% cheaper than traditional car rental service
More choices (from a ¥8500/day Ferrari F430 to a ¥60/day Santana)
Guaranteed by PICC with tailored insurance 
Seasonal promotion coupons with gifts
 
You might wonder what on earth their business model is. 
 
First, car sharing is a P2P platform, where peer car owners can advertise their car information online to renters. That means all of the cars are in good condition as they are privately owned and have less than average mileage. The idle time (the time gap between two rentals) is longer than those from car rental companies meaning you are more likely able to find a rentable car that fits your schedule. 
 
Second, the car sharing market is ready to take off in China. According to the survey by Roland Berger, there are nearly 200 million driver license holders in China, while the passenger car parc is only around 100 million and this number will not increase dramatically in the future as new car purchasing rate have been slowed down in recent years. You can clearly see a gap here between supply and demand. 
 
Nevertheless, are car owners willing to share their car with strangers? Statistics show owners are! According to the data from AT Zuche, currently, car registration on their platform is increasing at a rate of 80 cars per day. The CEO has an ambition of integrating 400,000 cars into their national network.
 
In my opinion, car sharing will become more and more important in the near future. Air pollution in urban Chinese cities have resulted in government legislature to limit car licensing and registration thereby limiting the number of cars on the road. Car sharing therefore, becomes a more cost-effective method to improving the situation. Penetrating the market and raising awareness are the two biggest challenges lying in front of them.