China Auto Rental deal hints at US interest

By Zhao Qian

China Auto Rental, one of the country's biggest car rental agencies, signed a strategic agreement Wednesday with Enterprise Holdings Inc, North America's biggest auto rental firm. Analysts welcomed it as a necessary step in expanding overseas.

Enterprise Holdings currently operates three car rental subsidiaries – Enterprise Rent-A-Car, National Car Rental and Alamo – with Alamo mainly targeting international tourists.

Under the agreement, Chinese consumers will be able to rent Alamo cars in North America via China Auto rental domestically, either online or via telephone reservations.

Customers will have the option of paying China Auto Rental here, or after arriving in North America. GPS services and language translation options will also be available, according to the agreement.

Yao Hongjun, deputy chief executive officer with China Auto Rental, said that some foreign brands, such as Avis and Hertz, have been operating in China for several years, and one of their advantages is that they can operate international services for domestic consumers.

"Cooperating with Enterprise Holdings could make up for our deficiency," Yao said.

Yao said China Auto Rental has no plans to expand directly overseas, but that this cooperation could help build advanced management expertise.

As for Enterprise Holdings, a rise in Chinese outbound tourists is their motivation to cooperate with China Auto Rental.

"Although there are about 50 million Chinese tourists traveling overseas each year, only a small share, about 1 million, come to the US. But more Chinese travelers will choose the US as a destination as the visa processes become easier," Jerry Mosiello, vice president of Enterprise Holdings, told the Global Times at a press conference.

"We anticipate that 2015 will be a benchmark year in terms of overall growth. That is why we want to exploit the Chinese market," he added.

Mosiello echoed his counterpart Yao Hongjun, saying that although China's market was obviously big, his company still had no plans to enter it directly. "That is why we are cooperating with China Auto Rental," he said.

"It will take a long time for China Rental to expand directly overseas, since the front-end investments will be huge, and it takes time to adapt to different countries' personal credit systems," Li Hengyu, an analyst with CIC Industry Research Center, told the Global Times Wednesday .