eHi Car Service, the second largest auto rental company in China, worked with its new shareholder Enterprise Holdings to build an international auto rental platform. The new platform was launched in June, marking another round of new progressive actions of foreign auto rental companies represented by Enterprise Holdings.
Zhang Ruiping, founder and CEO of eHi Car Service, said that the company’s international platform allowed the Chinese residents to make reservations and consultancies by connecting to Enterprises Holdings’ network via eHi’s Chinese platform when they need to rent cars during their travel in foreign countries. In addition, the global clients of Enterprise Holdings can rent cars in China via the website of eHi if they have the need.
“Foreign auto rental companies cannot resist the appeal from the great potential of the Chinese auto rental market,” said auto analyst Jia Guangliang. Presently, a reserved estimation made by experts revealed that the demand in Chinese auto rental market will reach 300-400 thousand units in 2015 and the operating revenue to achieve 18 billion yuan.
Prior to that, foreign auto rental giants, which were bullish on the outlook of Chinese auto rental market, entered China successively. But they had unpleasant performance due to various reasons. In 2002, Hertz and Avis entered China. The former had over 8,000 stores around the globe but never achieved success in China before leaving in 2006. The latter was always careful by adopting the directsale store pattern to provide longterm rental services for international enterprises.
“Presently 80% of auto rental companies in China have fewer than 50 cars and 70% of them have fewer than 5 official employees. The Top 10 auto rental companies collectively took only 10% of the market, revealing the low degree of centralization in this industry,” Jia Xinguang said. When comparing the status quo of foreign auto rental industry, it is easy to find the great boom the Chinese auto rental industry can achieve in the future.
In recent two years, the changes are looming in the domestic auto rental industry as the three big domestic auto rental companies – China Auto Rental, eHi and Top One – all received a huge amount of venture investment, which was under heavy scrutiny. It is worthwhile to mention Enterprise Holdings once worked with China Auto Rental for a while before its “marriage” with eHi. Last year, the largest auto rental company was reported to sign a strategic cooperative agreement with Enterprise Holdings to officially launch the international auto rental reservation services, but the substantial business of this cooperation was not fully started.
In order to get more local advantages in China, Enterprise Holdings acquired 15% of the stake of eHi Car Service at the end of this March and got several seats in the company’s directorate. In that way it stepped into the Chinese market indirectly.
In Jia Xinguang’s opinion, though the Chinese auto rental industry is the fastest growing market in the world, localization is needed if the foreign market plans to get into the Chinese market. As the second largest auto rental company in China, eHi Car Service can make use of the international position of Enterprise Holdings to get into the international auto rental market.
It is known that Enterprise Holdings was founded in 1957 and by now it had owned 1.2 million cars and trucks as well as 70 thousand employees. It annual revenue reaches 14.1 billion U.S. dollars, much higher than its rivals Avis and Hertz.
“The cooperation between Enterprise Holdings and eHi Car Service was more profound than its cooperation with China Auto Rental,” Jia Xinguang said. Though what substantial changes can be brought by the marriage between eHi Car Service and Enterprise Holdings are not sure, the cross-border cooperation can definitely stir the current Chinese auto rental market.
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