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Can the price reduction work miracles in the car rental market under the epidemic?

With the recovering of various industries, the impact of the epidemic on people's restrictions on going out is also being accepted. At the same time, how to formulate new product operation rules based on the current situation and promote the normalization of company operations has become the key content .


Recently, the car rental industry has started a discount season. Car rental platforms with different models, such as China Car Rental, Shouqi Car Rental, Bump Car Rental, and Ctrip Car Rental, have begun to reduce prices to promote rentals, and daily rental prices have generally fallen by more than 50%. In addition to direct price reductions, car rentals in the form of weekly rentals, monthly rentals, weekday packages, and long-term rentals  have become popular marketing methods for car rentals.


China car rental page


The impact of the epidemic on the car rental industry is obvious. "The traffic loss of car rental companies reached 50%." Ouchou Travel CEO Zhang Wenjian said, but at the same time, shanghai long-term car rental business has grown.


Bump Car Rental is a private car rental, which rents out people's idle vehicles. It is different from the self-operated car rental represented by Shenzhou Car Rental and the third-party platform Ctrip.


But nowadays, the "sale of tears" is happening on almost every rental platform. Such price cuts are, on the one hand, to deal with the impact on business caused by the disappearance of most people's travel demand under the epidemic. On the other hand, when public transportation becomes a more risky mode of travel, cars will undoubtedly meet people's necessary travel needs such as commuting to work.


In the past, most of the orders for car rental platforms came from short-term travel needs. After this epidemic, the stability and importance of commuting and long-term rental became apparent. To maintain the balance between long-term and short-term rentals, it is time for the platform to work hard on the long-term rental strategyEspecially for shanghai long-term car rental.


Crisis appears


Under the epidemic, whether the car rental on the Internet is posted and cannot be driven, or the car rental but cannot be repaid and renewed, it truly reflects the plight of the car rental industry.


 For users, the loss of renting a car during the epidemic is not only due to the restrictions on going out, which makes the car rent for nothing, but also the mandatory renewal fee caused by traffic control in the epidemic area. But in fact, the car rental platform did not benefit either. Due to the compulsory situation of the epidemic, the user's contract renewal is far lower than the normal market level, and it is not a good deal at all.


More importantly, the traditional car rental model emphasizes assets and operations. Car rental platforms need to buy cars, build sites, and operate and maintain. Even if funds are sufficient, expansion is cautious.


In 2018, the car rental industry started a form of competition. Expanding business means spending a lot of money on vehicle purchases, site rentals, and manual operation and maintenance. Fixed asset operation and maintenance is a big expense.


Expenses are indispensable, but demand has dropped a lot. "Now the traffic is blocked, and there is basically no travel demand." Zhang Wenjian told Huxi that a large part of the demand for car rental comes from travel, and now, this part of the demand has been hit hard.


In the car rental industry, the higher the rental rate, the higher the efficiency of operations. Travel restrictions during the epidemic have led to a sharp drop in the demand for inventory vehicles, and the occupancy rate has dropped significantly compared to usual. In addition, vehicles that cannot be collected in time and cannot be rented at market prices have further lowered the rental rate.


On the other hand, whether it is the acceptance of car rental from the perspective of users or the rental rate from the perspective of platforms, China's car rental industry still has a lot of room for growth.


Take Shenzhou Car Rental as an example, its vehicle rental rate in the first half of 2017 exceeded 68%, far exceeding the industry level. In the car rental industry, which is clearly divided into low and peak seasons, this number represents high operational efficiency. The "2018 China Car Rental Industry Research Report" shows that the top three car rental market shares in 2018, Shenzhou Car Rental, EHi Car Rental, and Shouqi Car Rental, together accounted for only 29% of the market share.


In other words, the market needs to be developed.


Can the price cut work miracles




It may seem difficult to make increments during the epidemic, but in fact it has more advantages than usual.


In addition to the third-party platform, the different characteristics of the two models of the current mainstream car rental platforms can meet different incremental demands.


The traditional heavy asset model mentioned above, represented by China Car Rental, is currently the car rental platform with the widest coverage. The more cities covered, the greater the possibility of breaking through the limitations of short-distance travel.


Secondly, this model of car rental platform was established early, and a relatively mature service and after-sales system has been established. The quality control and maintenance of rental vehicles can be controlled, and standardized services are more easily accepted by consumers.


In addition, thanks to the ownership of the vehicle and the platform, the self-operated car rental platform has stronger control over the vehicle and the discount measures are more attractive.


Take Shenzhou car rental as an example. Under normal circumstances, the daily rental price of the Chevrolet Cruze of 188 yuan per day is now 108 yuan, and the weekly rental (4 days) price is 69 yuan per day, which is less than 4% of the weekday price, plus the basic The service fee and vehicle age maintenance fee are 450 yuan for a 4-day rental, less than half of the previous price.


The private car rental model represented by bump car rental has flexible car rental methods, and the loss is small at this stage.


Bump car rental page


The rental cars provided by the private car sharing platform are owned by individuals. The platform only serves as a third-party information matching party, matching idle private cars with user needs, and assuming the responsibility of operation. It does not need to invest huge amounts of money to buy cars and rent venues. Low cost means that the price for users to rent a car is also low, and it is easier to be accepted by car-free users who value cost-effectiveness.


In addition, during operation, the user agrees to pick up the car or send the car to the door without waiting for a third-party verification procedure. This form of car rental with fewer rules and fewer restrictions will be more popular with young people under the requirements of safety during the epidemic. "Our model is a special category, e-commerce similar to the car rental industry, which may have a more positive impact on us." Zhang Wenjian said.

Regardless of the model, short-distance travel accounts for most of the revenue in the car rental industry. Supplementing daily travel through commuting or long-distance demand is one of the effective measures to balance the off-peak season. It will also break the high frequency and rigid demand for buying a car in the past. Just needed impression.


At present, the safety of public transportation and the necessity of commuting have created opportunities for the car rental industry. After the normalized operation of price reduction measures during the epidemic period, the reduction of car rental costs will inevitably cultivate new users with the habit of renting a car to work.