Car sharing promising but needs guidance

By Li Qiaoyi Source:Global Times Published: 2017/5/3 18:48:39

Illustration: Peter C. Espina/GT

While cycles for hire remain all the rage in many cities across China, it seems that some of the cities bedecked with colorful bikes are already enjoying another boom: Car-sharing services are also becoming popular with China's city dwellers.

China has finally joined the rapidly evolving car-sharing trend that has produced globally recognized names such as Zipcar and Car2Go. But just as rented bikes could easily become a headache in China - given that a lot of bikes have been found discarded in stacks on the streets and have thus become roadblocks - shared cars could also end up causing trouble if relevant regulators fail to put into place rules that enable growth in a disciplined fashion.

Another factor is that it's harder to run a car-sharing business, which has higher barriers to entry than bike rental.

Epitomizing the bourgeoning car-sharing fervor across major Chinese cities including Beijing and Shanghai, a rising number of shared vehicles - largely electric-powered - are now being used. In essence, car-sharing services fall into the category of car rental. But unlike traditional car rental that charges per day or month, shared cars are charged for per minute and therefore can match bikes for hire in terms of convenience and flexibility.

The affordability of shared cars is also important. Gofun Chuxing - the car-sharing arm of State-owned Beijing Shouqi Group - charges only 1 yuan ($0.15) per kilometer and 0.1 yuan per minute, thus making car rental nearly as accessible as bicycle rental. There's no reason for the market to turn a blind eye to what seems to be the next big sharing craze, especially considering that a host of bigger cities in the country have issued restrictions on vehicle license plates. For those legally licensed drivers who are yet to be granted a license plate, vehicle sharing services seem to be a good choice.

That certainly paints an alluring picture and there are already various car-sharing services available in the market. At an event in late March in which domestic automaker Chery Automobile delivered 4,000 purely electric-powered cars to Beijing Shouqi Group, an agreement was also signed to purchase an additional 10,000 eQ1 electric cars from Chery this year to add to the resources available for Gofun Chuxing. By the end of the year, Gofun Chuxing will be available throughout all first-tier cities, provincial capital cities and second-tier cities in developed costal regions, according to the company.

In addition to car rental firms such as Beijing Shouqi Group, automakers including Daimler AG and Internet firms like TOGO, an app-based car-sharing firm, have made inroads into the car-sharing space as well. But along with the rising popularity has come concerns over how to ensure the car-sharing boom won't cause unpleasant side effects. In fact, there have already been media reports of unscrupulous parking of shared cars that blocked driveways.

To ensure a well-regulated marketplace for car-sharing services, the authorities should come up with rules that address worries about not only the parking issue, but about wider issues including vehicle qualifications and car insurance. Admittedly, customers generally don't tend to worry about car-sharing services provided by rental firms, but they are likely to be put at a disadvantage if they opt for services offered by Internet firms that serve as a platform bridging customers and vehicles.

With rules and regulations already in place for car-hailing businesses, it should be easier for car-sharing services to be placed under the purview of relevant regulators. Theoretically, the new rules could be announced either as a supplement to existing rules overseeing the car-hailing arena or as a separate set of regulations.

Having said that, it also needs to be noted that car-sharing appears to be a riskier venture in China than bike-sharing. The higher barriers to entry include the costs of building facilities for car charging and parking. Additionally, car repair and maintenance is costly. This, coupled with the often spotty user experience owing to difficulties in finding a place to charge or park the vehicle and unconvincing business models, has heightened the need for more clarity in the market. Beijing-based car-sharing firm Youyou Yongche terminated operations in March, claiming that previously agreed funds were not put in place in due time.

As such, to show the market that shared cars are genuinely in the fast lane, both the authorities and venture capitalists should consider their next moves promptly yet carefully.

The author is a reporter with the Global Times.

Posted in: JUST TECH

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