Domestic demand for vehicle rentals is set to skyrocket in the bicycle kingdom.
An eHI car rental office Image: eHI |
Industry experts are heralding car rentals as the next big hope for China's auto sector. According to the China Taxicabs and Livery Association, the Chinese car rental market will reach as much as 400,000 vehicles and produce $2.8bn in revenue by 2015. Consulting firm Roland Berger puts this figure even higher at $5.9bn.
Once reliant on two wheels, modern China is now becoming one of the worlds largest automotive markets, and is expected to have over 200 million cars by 2020. However, strict regulations within cities, such as sales restrictions, increased parking fees and limitations on outside vehicles, are driving growth in the emerging rental sector.
Currently, China's biggest rental company is eHi, but it is being closely followed by China Auto Rental, which has a fleet of over 22,000 cars in 58 different cities and hopes to double the size of its operations by the end of the year.
Recently, the company acquired two of its largest competitors in a $14m deal and received a $190m cash injection from IT brand Lenovo's parent group Legend Holdings. It won't be an easy ride for western companies, however, as Avis and Hertz found out in 2006 and 2007 when they failed to adapt their business model to the Chinese market.