The outbreak of COVID-19 has brought unprecedented changes to global car rental business, causing even the industry giant, Hertz, filed for bankruptcy protection in May. But now the situation in China is entirely different. After the government eased inter-provincial travel restrictions, China’s car rental industry has been recovering steadily.
Due to the characteristics of COVID-19 transmission, it has become a common understanding for people to avoid traveling in public transportations, whether for work or for leisure. At the same time, self-driving and recreational vehicle tour are becoming preferred ways of travel. Therefore, the demand for car rental boomed.
According to the Report of Chinese Car Rental Industry Recovery 2020 by Ctrip, the country’s car rental market quickly overcame the impact of COVID-19 outbreak, recovered and even grew bigger over last year. The overall scale of the industry is expected to exceed 100 billion RMB by the end of 2020. The Report also pointed out that the rapid development of personal short-term car rental and self-drive travel is the major driving force of the industry’s speedy recovery.
Statistics shows that although around 400 million Chinese have driving licenses, only 200 million of them own private vehicles. And there are only 15 million car rental users per year. “The penetration rate of car rentals in China’s domestic tourism market is still very low. The future market size is expected to increase to more than 300 billion RMB. And self-drive travel in China will become as common as in Europe and America,” said Jiang Wen, the Chief Operating Office of Ctrip Car Rental.
Source: CTrip
Translated by: Travel Link
Key market players only take up 30% shares in China’s fragmented car rental market
Car rental industry started late in China, and is still in lack of appropriate regulations in many areas such as intransparent car rental fees, cancellation and changing policies, insurances, heavy deposits, and low availability of one-way rental service. All these are what the users of car rental care the most.
In addition, the fragmentation in car rental market is also a major problem. As revealed by Ctrip’s Report, the top 5 car rental companies only take up 30% of the whole market, whilst the rest 70% were shared by more than ten thousand small and medium sized companies offering low price services.
Most car rental companies in China adopt an asset-heavy business model with high costs but low profits. Although small and medium-sized companies account for 70% of the market, they are weak in branding and lack of sales channels to gain new clients. This affects the stability of the whole car rental industry as a result.
The presence of Ctrip Car Rental in market will help drive industry development
As the tourism industry is slowly recovering after the pandemic, profits of Ctrip’s main business units such as air ticket and hotel room bookings are limited. But the car rental business harbors great potential to grow. It is said that Ctrip Car Rental has been enjoying the fastest recovery among all business arms of Ctrip Group. The GMV of Ctrip Car Rental exceeded that of the same period in last year, and is expected to be increased by 30% this year. The year-on-year growth in number of users will also arrive at 40%.
At the press conference jointly organized by Ctrip and several car rental companies, Ctrip not only announced their plans and strategies, but also introduced 9 industrial codes of “Carefree Rental”. The codes urge businesses to pursuit self-upgrading by clearly illustrating consumers’ rights to receive transparent information about deposits, vehicle conditions, fuel policy, cancellation and refunds.
According to Ctrip, they are now in collaboration with more than 2,000 car rental companies, offering services from over 50,000 stores in 700 cities across China. The collaborations between Ctrip and car rental companies are believed could help drive the industry to become more open and transparent, and to provide services with high standards and high quality.
Source: Travel Link Daily
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