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Interpretation of the market overview of the car rental industry

The car leasing industry will develop in three directions in the future: the first is customized leasing; the second is the cooperative financial system; the third is the shortening of the vehicle renewal cycle.


Car leasing business is divided into operating car leasing business and financing car leasing business according to its nature. Operating car leasing, that is, leasing in the traditional sense, means that the car leasing company leases the purchased self-owned vehicle to the lessee. The lessee pays the rent on schedule. After the lease expires, the lessee returns the vehicle, and the car rental company continues to use the vehicle. Rented to other lessees; financing car leasing refers to companies or individuals that have long-term car needs. The car rental company leases the purchased vehicles to customers for long-term use. The customer pays the rent on a monthly basis. When the lease term expires, the car rental company will The transfer of vehicle ownership to customers is an innovative format that combines car leasing and finance.


1. Industry classification of car rental companies


Car rental companies are mainly engaged in car rental services. According to the "Guidelines for the Classification of Listed Car Rental Companies" issued by the China Securities Regulatory Commission, the business of car rental companies belongs to the K39 "rental service industry". According to the national standard of "Classification of National Economic Industries" (GB/T 4754-2011) promulgated and implemented by the National Bureau of Statistics in August 2011, the industry of car rental companies is one of the "machinery equipment leasing" under the "leasing industry" category. One branch-car rental.


2. Industry development overview and prospects


(1) Overview of the development of the car rental industry


1. Overall overview of the development of the international car rental industry


The international car rental industry has a history of more than 100 years and was initially limited to the European market. After the Second World War, the car rental industry entered a period of vigorous development. The market broke through the geographical restrictions in Europe and showed a trend of development worldwide. The scale of operations expanded from 15 billion US dollars in the late 1980s to over 100 billion US dollars in 2000. The number of car rental companies in the industry has also exceeded 5,000. After entering the 21st century, the international car rental market has penetrated into all aspects of the automobile industry.


2. Overall overview of the development of China's car rental industry


China's car rental industry is still in an early stage of development, with a low penetration rate and huge potential in the future. Car leasing services can be divided into financing car leasing and operating car leasing according to the nature of the leasing. Operating car leasing can be further divided into short-term lease and long-term lease according to the length of the lease. At present, most of the leased vehicles in the market are used for short-term lease and short-term lease. Renting is currently the most mainstream way of car rental.


As of the end of 2012, there were thousands of car rental and car rental companies in China, and more than half of them were located in first-tier cities such as Beijing, Shanghai, and Shenzhen, with limited distribution and penetration in second- and third-tier cities. In terms of market share, the market share of the top ten rental car rental companies is about 12%. Although the concentration has increased compared with 2011, the relatively mature market is still quite low. In terms of the distribution of the number of enterprises, the number of shanghai long-term car rental car rental companies operating in small-scale regional operations is the largest. Except for a few large-scale enterprises, the average fleet size is only about 50 cars, which is difficult to achieve economies of scale; financing car leasing The number of car rental companies is small, and the annual car rental volume is not high. Although more than a dozen large-scale short-term car rental companies have been formed in China, such as Shenzhou Car Rental, EHi Car Rental, Wintime, etc., the overall market share is still lower than that of mature markets.


Another obvious sign that China's car rental industry is still in the early stages of development is that the market car rental penetration rate (the number of rental cars as a percentage of the total number of passenger cars) is significantly lower than that of mature European and American markets. At present, the personal leasing market is basically not open in China. Even for car leasing company fleets, the leasing penetration rate is less than 10%, and the customers are basically foreign companies. In mature markets such as Germany and France, nearly 50% of the car leasing company vehicles each year Will be sold on lease.


In some major leasing markets such as Shanghai and Beijing, regulations still have strict nominal restrictions on car leasing. For example, Shanghai has strict restrictions on corporate leasing qualification certification and vehicle license plates (Y license plates), but due to the huge demand for car leasing in the market , There are many unqualified vehicle operations, and the government has not cracked down on them, making the gray market almost the mainstream of the local car rental market. However, from the perspective of market demand and the current government's attitude, market regulations will at least maintain the status quo in the short term, while in the long run, similar regulatory restrictions will eventually be gradually lifted.


3. Overview of the development of the operating car rental market


(1) Short-term rental market


Short-term rental car rental companies are a group of car rental car rental companies that emerged around 2006, but they are developing rapidly. With the change of people's consumption habits and the improvement of the personal credit system, the short-term car rental market is expanding day by day. For short-term rental car rental companies, a large amount of capital is required to equip vehicles of various grades, and at the same time, a mature online network system and offline physical online store are required. The investment is relatively large; as the demand for car use grows, short-term rental in the future The growth of the model is worth looking forward to.


With the rise of Internet private car, the short-term rental market has ushered in a new round of major reshuffle. Major car rental and car rental companies across the country have adjusted their market strategies in due course and joined the competition in the Internet private car market. There are examples of short-term car rental companies:


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Roland Berger predicts that China's short-term self-driving car rental market will grow from 6 billion yuan in 2013 to 18 billion yuan in 2018, with a compound annual growth rate of 27%.


(2) shanghai Long-term rental market


shanghai Long-term car rental car leasing companies started early, and have begun to develop in the 1980s and 1990s, and a considerable number of them are state-owned enterprises. Although they are large in number, they are not large in scale, and their customers are also concentrated in some state-owned enterprises. Enterprise or foreign-funded enterprise.


shanghai  Long-term rental companies are mainly for corporate users. At present, most of the long-term rental companies in the market are foreign-funded enterprises, so foreign-owned automobile brands are more popular. The advantage of long-term rental is that the income and costs are predictable, and its existence time is longer, and the model is relatively mature; the disadvantage is that the price is higher at this stage. For many companies, it is not economically cost-effective compared to buying a car. In the future, as costs decrease and its advantages (such as lowering the cost of enterprise fleet management) are more widely accepted, the prospects will also be better. There are examples of long-term car rental companies:



(2) Development prospects of China's car rental industry


According to PwC analysis, five industries that play an important role in the sharing economy will emerge in 2025, including car sharing. The popularity of car leasing in China is gradually rising. Some factors are driving consumers to gradually alienate the traditional car ownership model and shift to concepts similar to car sharing and car leasing, focusing on vehicle use rights rather than ownership rights.


In the Twelfth National People's Congress in 2014, the government work report put environmental protection on the agenda. Government representatives discussed effective measures to save energy, reduce exhaust emissions, and avoid and control environmental pollution, and proposed the implementation of a new generation of people-oriented urban modernization guidelines. The NPC meeting highlighted several trends that will drive the growth of car sharing and car rental:


1. Urban modernization. Urban modernization makes the urban area more crowded, prolongs the waiting time of traffic, and deepens the degree of environmental pollution. Car rental and car sharing can better increase the utilization rate of cars and effectively reduce the disadvantages brought about by urban modernization.


2. Regulations. Most municipal governments (including Beijing, Shanghai and Tianjin) have issued measures aimed at reducing congestion and air pollution, such as vehicle number restrictions, urban parking restrictions, and encourage public transportation, bicycle travel and electric vehicles. These measures will restrain the supply of the auto market and make the auto market supply and demand imbalance. Car rental can satisfy consumers' demand for self-driving cars and effectively balance market demand.


3. Consumption concept: The concept of consumers is shifting from owning a particular item to charging according to the time or number of times the item is used. Car leasing happens to be a good example. It can not only bring convenience to consumers, but also help auto manufacturers to promote new models and shape their brand image.


4. Technological innovations and Internet technology innovations, such as smart phones, mobile navigation, car networking, car sharing applications and mobile payment, etc., ensure that consumers can easily make reservations, find cars, drive, and finally return the car.


5. Pollution. In China, air pollution is a problem that needs attention both for consumers and the government. The Yangtze River Delta, the Pearl River Delta, and the Beijing-Tianjin-Hebei region experience more than 100 days of haze every year, and the severity of pollution is 2 to 4 times the reference index published by the World Health Organization. On average, a fully utilized shared car can replace 17 private cars, so car sharing and car leasing are effective measures to reduce car exhaust emissions.


In addition to macro factors, the needs of special car use for work and the demand for personalized car use in spare time have caused people to have special needs for car functions and configurations at certain points. In the ordinary sense, car rental companies and families cannot buy cars. Meeting these specific needs leads to mismatches in vehicle demand and use. Car rental car rental companies can provide different customers with different vehicles to meet customers' temporary special car needs.


1. The update cycle is short


With the increase in income and consumption levels, people's desire to update high-end consumer products is increasing, such as the rapid update of mobile phones. In the European and American markets, the average replacement cycle for cars is 8 months. Compared with self-purchasing cars, car rental services can better meet the needs of consumers to quickly update their cars. At the same time, the cost of renewing leased cars is lower than renewing self-purchased cars, which can meet the needs of consumers for wealth preservation.


2. Provide one-stop after-sales service


The post-purchase repair, maintenance and annual inspection of self-owned vehicles are huge money and time costs for consumers. Compared with this, car rental services have irreplaceable advantages in these aspects. Car rental car rental companies will provide one-stop after-sales service such as repairs, maintenance and replacement of rented vehicles.


3. Reduce financial risks


The high cost of self-purchasing vehicles will lead to an increase in borrowings, an increase in fixed assets, and a decrease in current assets, which will cause consumers to face financial problems such as tight cash flow; the cost of leasing a car is relatively low, whether it is an operating lease or a financial lease, it will avoid consumers one-time Pay a lot of cash, effectively reducing consumers' financial risks.


4. Simplify insurance claims procedures


After a consumer has a traffic accident, the owner of the car must personally negotiate with the insurance car rental company to settle the claim. The owner’s unfamiliarity with the reporting and claim procedures will cause higher time and money costs. Car rental car rental companies have a good cooperative relationship with insurance car rental companies, and they have professional claims specialists. The professionalism of car rental companies gives them a clear advantage over individual car owners in the claims process, and can quickly complete the claims process , To meet the needs of consumers for the convenience of subsequent use of cars.


Looking to the future, China's economy will continue to grow steadily and drive rapid growth in residents' income. In addition, the growth of car ownership and sales, the improvement of the market supply chain, the asset-light management trend of car leasing companies, the rapid development of car leasing companies and the improvement of product maturity, as well as the improvement and opening of related leasing laws and policies, Will give a positive boost to the development of China's car rental industry. According to statistics, the scale of China's car rental market in 2013 has exceeded 34 billion yuan, with a growth rate of 19.2%. The growth rate is expected to exceed 10% in the next two years.


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In 2013, the transaction scale of China's online car rental market exceeded 3.4 billion, a year-on-year increase of nearly 70%. It is expected that the growth rate of online transaction scale in the next four years will exceed 20%.


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The car leasing industry will develop in three directions in the future: The first is customized leasing, which can meet the individual needs of renters. In the Beijing car rental market, most of the international rental brands have entered the market. They have taken advantage of their own business to take the lead in setting off a wave of "customized leasing" in China. At present, "customized leasing" has become the core business of large leasing companies, mainly for the management and development of group customers and long-term customers. The second is the cooperative financial system. Due to the imperfect personal credit system, the rate of fraudulent rent in the domestic leasing industry has been high, resulting in cumbersome car leasing procedures. The combination of leasing companies and financial systems will alleviate the problem of rent fraud to a certain extent. At present, some leasing companies have begun to cancel the procedures for checking account books and deposits, and begin to use bank credit cards for identity verification and deposit payment. This can simplify the procedures to a certain extent and reduce the rate of rent fraud. The third is the shortening of the vehicle renewal cycle. In the mature car rental market in Europe and the United States, the age of rental vehicles is about one year, and the rental vehicles over two years will be eliminated through the second-hand car channel. With the expansion of domestic car rental companies and improved management, the renewal cycle of rental cars has been reduced to 3-5 years or even shorter.


(3) Relationship with upstream and downstream industry


With the auto market's growth rate returning to normal and new car sales profits declining, automakers are facing greater inventory and sales pressure. Financial leasing can effectively lower the threshold for consumers to buy cars, thereby promoting new car sales and subsequent after-sales markets. Service has become a new profit growth point. Operating car leasing can also effectively achieve mass sales. Therefore, car leasing companies have become a larger sales channel for manufacturers, and they can quickly update their huge fleet. At the same time, manufacturers and dealers are also actively involved in the blue ocean of the car rental industry. In addition, the domestic auto manufacturing industry has a low degree of concentration, and auto leasing companies have a higher degree of freedom in choosing suppliers. Therefore, the auto leasing industry has a strong bargaining power for upstream industries.


(4) Main competition conditions faced by car rental companies


Industry competitive landscape


Under the trend of auto market growth returning to normal and new car sales profits declining, financial leasing can effectively lower the threshold for consumers to purchase cars, thereby promoting new car sales and subsequent after-sales market services, and becoming a new profit growth point. Dian is also popular among enterprise users. Operating car leasing can also effectively achieve bulk sales. Therefore, not only professional car rental car rental companies, but also manufacturers and dealers are actively involved in the blue ocean of car rental. The classification of rental car rental companies is shown in the table below:


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At present, the overall market is still highly fragmented, with the market share of the top 10 car rental and car rental companies being only 12%. From the perspective of category segmentation, short-term car rental companies require a lot of funds, vehicles, and network support. The number of car rental companies is the least, but the number of cars is the largest; the number of shanghai long-term car rental companies is the largest, about 80% of car rentals Companies can be classified as long-term rental car rental companies, but most long-term rental car rental companies are small local businesses; the number of financial rental car rental companies is not large, and they are mainly concentrated in first- and second-tier cities, with limited rental vehicles .


It is worth noting that more and more medium and large enterprises use their own advantages to expand their product lines or expand their business areas to seize market share. The short-term rental companies with the largest fleets have begun to gradually introduce long-term rental business. Due to the effect of the fleet size, they can get lower-priced vehicles. The shanghai long-term rental business prices of short-term rental companies are obviously more attractive, combined with their financial advantages and marketing and management.