Cars

Would-be buyers driven to rent

By Li Jing (China Daily)
Updated: 2011-01-06 15:42

A worker checks out a car at a rental company. [Photo / China Daily]

People look for other ways to get behind wheel following new rules

Car rental agencies have been enjoying a boom in business ever since new restrictions made it harder for people to buy an automobile in Beijing.

Under the new regulations, the authorities have stopped the free-for-all among would-be drivers and are now limiting the number of new vehicles allowed on Beijing's roads each month.

Through a new lottery system, 240,000 license plates will be issued in the capital this year, which is one-third of last year's total.

With such restrictions in place, more would-be buyers are choosing to rent.

"I don't know when I will be lucky enough to be selected through the lottery, so I will rent a car until I get the chance to apply for a new car license plate," said Liu Min, a woman in her 30s.

Car rental agencies said many people are doing the same as Liu.

"To some extent, the new regulations have driven people to change their minds about renting cars," said Andy Peng, the deputy general manager at Avis Rent a Car.

The popularity of renting a car was obvious during the New Year holiday when 90 percent of available vehicles were snapped up at agencies including China Auto Rental Ltd, eHi Car Service and Xianglong Car Service.

A staff member at the Guomao branch of China Auto Rental Ltd said the company supplied a variety of vehicles during the holidays.

"Four-figure yuan per day fees did not stop clients from renting luxury cars like Audis and Mercedes-Benz," he said. "The supply fell far short of demand."

Sun Yang, who rented an old Jetta one week before he embarked on a road trip over the holidays, said he failed to rent a Toyota Camry after visiting several shops.

"There were hardly any cars available because most had been booked weeks earlier," Sun said.

New restrictions that came in this week mean that vehicles with out-of-town license plates will not be allowed to enter the area bounded by the Fifth Ring Road during rush hour. Those rules have also led to a jump in the number of people looking for a rental car.

"My car is licensed in Tianjin and now I have to rent cars to do my business," said Huang Kan, a salesman at a Fortune 500 company in the Central Business District.

The demand for rental cars is expected to soar during the upcoming Spring Festival.

"Spring Festival is the traditional prime time for the business and companies usually have no cars available two weeks before the holiday starts," said a manager at Xianglong who gave his name as Zhang.

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The cost of renting a car also usually hits an annual high during the Spring Festival.

Zeng Yan, public relations manager at China Auto Rental Ltd, said discounts offered by the company since Dec 10 will come to an end on Jan 13 and the price will rise during the Spring Festival.

According to Zeng, the second quarter of the year is likely to be very good for the business.

"Those who failed to buy a car because of the limits of the car registration system will turn to rental cars," Zhang added.

Most industry insiders believe the car rental market will develop quickly because of the soaring demand.

During recent years, the industry has been growing slowly because of the public's preference to own a car. Most car rental companies have depended on the commercial sector to make a profit.

At Shouqi Car Service, 80 percent of profits have traditionally come from its commercial service. The company says it will now add more family cars to its fleet.

Peng from Avis Rent a Car said Beijing's private car rental market has lagged behind cities such as Guangzhou and Shanghai.

"But the impact of the new rules will change the situation and attract more private customers," Peng said.

Avis is slated to switch its attention from commercial customers to private ones, he said.

Currently, the new regulations brought in limit the number of cars in the city to ease its traffic gridlock. And new car rental agencies are not allowed to register.

Industry insiders believe the gap between growing demand and limited supply will lead to price rises in the car rental business.

But Peng said his company has no plans to hike price.

"Compared to the flourishing car rental market in the United States and Europe, the market in China is still at the starting point," he said.

"What we need to do most now is improve our service. And more regulations and rules are needed to be included in the industry to make it grow."