Auto rentals revving up

• Source: Global Times
• [08:36 January 28 2011]
• Comments

Immature market

Zhong said that among the major obstacles Avis met after it entered the Chinese market were confusing regulations.

"Since China's car rental industry was in its infancy, unlike overseas there is no unified price standard, so it always confuses the customers," Hong said, "Whoever understands the Chinese market better will have the advantage."

As for the country's biggest domestic renter, China Auto Rental, "fostering a healthy market is urgent," said China Auto Rental vice president Qian Zhiya.

"Most of the domestic customers are unfamiliar with the procedures for renting cars, and the rate of breaking traffic laws is very high, since some think that they can do anything because they are not driving their own cars," said Qian.

Qian said their profit margin is very small because costs, including purchasing and management of post-rental services, are very high.

Unlike the well-known foreign auto rental companies that earn money both through renting and used auto sales, domestic companies rely wholly on rental revenue, so "the domestic rental way of making money is also in its infancy," said Li of CIC Industry Research Center.

The lack of rules is the biggest challenge the agencies meet, Li said "There has been a lot of fraud in recent years which has incurred business risks and losses."

As for the car rental customers such as Wang, good service and lower costs are major concerns. "The rent is still high especially during holidays," said Wang.

Avid renter Li Tianli, who is tired of traffic jams and environmentally aware, is upbeat about his new transportation lifestyle. "Renting and car pooling is also wonderful."