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Avis unveils ambitious plan for China
By Jin Jing |
October 24, 2011, Monday
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Print Edition
Print Edition
EUROPE'S largest car rental company Avis said it plans to invest 2.5 biwwwllion yuan (US$391 million) in China in the next five years to strengthen its short-term leasing business.
The investment will allow the company to expand its short-term leasing car fleet by 10 times to 15,000 vehicles by 2016, according to Terence Chiu, general manager of Anji Car Rental and Leasing Co, Avis Europe's venture with Shanghai Automotive Industry Sales Co. The business-rental fleet will expand to 10,000 units, up from the current 4,000 units.
Chiu said the investment will play a key role in boosting business in China and allow Avis to catch up with domestic rivals amid fierce competition.
According to Chiu, the short-term leasing business has developed quickly in the past two years because of the growing number of people with driver's licenses and worsening traffic situations that limited vehicle purchases.
With wages rising and more people traveling, demand for short-term rentals has increased, Chiu added.
"Our revenue from short-term leasing has doubled every year over the past few years," he told Shanghai Daily.
Expanding the fleet will help the company meet demand in China, where competition from domestic rivals has intensified.
Auto-leasing firms such as eHi Car Service and China Auto Rental are gaining bigger market shares in China as they have invested heavily in advertising and offer cheaper rental prices.
Shanghai-based eHi secured a US$70 million investment from a consortium led by Goldman Sachs last year to help increase its car pool while China Auto Rental operates about 20,000 vehicles with service outlets covering more than 100 cities.
Chiu said Avis's strategy to build the brand and differentiate it from rivals is to offer better services such as the introduction of hourly-leasing and airport pick-ups. Accelerated expansion in key locations is also necessary, he added.
The company plans to double the number of service locations to 200 by the year end, focusing on airports, railway stations and scenic spots. The number will increase further to 1,000 during the next five years.
"We will continue to increase market penetration in large cities while also setting up a footprint in more second- and third-tier cities such as Fuzhou, Sanya and Haikou, where the local economies are developing quickly," the general manager said.
Chiu also said the company looks at mergers and acquisitions in China to speed up development.
"The Chinese market is still in the infancy stage," Chiu said. "Compared to several million vehicles operating in car rental businesses in the United States, the potential here is tremendous."
The investment will allow the company to expand its short-term leasing car fleet by 10 times to 15,000 vehicles by 2016, according to Terence Chiu, general manager of Anji Car Rental and Leasing Co, Avis Europe's venture with Shanghai Automotive Industry Sales Co. The business-rental fleet will expand to 10,000 units, up from the current 4,000 units.
Chiu said the investment will play a key role in boosting business in China and allow Avis to catch up with domestic rivals amid fierce competition.
According to Chiu, the short-term leasing business has developed quickly in the past two years because of the growing number of people with driver's licenses and worsening traffic situations that limited vehicle purchases.
With wages rising and more people traveling, demand for short-term rentals has increased, Chiu added.
"Our revenue from short-term leasing has doubled every year over the past few years," he told Shanghai Daily.
Expanding the fleet will help the company meet demand in China, where competition from domestic rivals has intensified.
Auto-leasing firms such as eHi Car Service and China Auto Rental are gaining bigger market shares in China as they have invested heavily in advertising and offer cheaper rental prices.
Shanghai-based eHi secured a US$70 million investment from a consortium led by Goldman Sachs last year to help increase its car pool while China Auto Rental operates about 20,000 vehicles with service outlets covering more than 100 cities.
Chiu said Avis's strategy to build the brand and differentiate it from rivals is to offer better services such as the introduction of hourly-leasing and airport pick-ups. Accelerated expansion in key locations is also necessary, he added.
The company plans to double the number of service locations to 200 by the year end, focusing on airports, railway stations and scenic spots. The number will increase further to 1,000 during the next five years.
"We will continue to increase market penetration in large cities while also setting up a footprint in more second- and third-tier cities such as Fuzhou, Sanya and Haikou, where the local economies are developing quickly," the general manager said.
Chiu also said the company looks at mergers and acquisitions in China to speed up development.
"The Chinese market is still in the infancy stage," Chiu said. "Compared to several million vehicles operating in car rental businesses in the United States, the potential here is tremendous."
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