Car-sharing steers a trend in tune with the young
Print Edition
Car-sharing is all the buzz among young Chinese. The trend is being driven by demand in the nation鈥檚 larger cities, where sharing is viewed as a cheaper, more flexible way of getting around than buying a vehicle.
My friend Li Xing, 25, who works for a media company, is among the frequent users of car-sharing.
鈥淚t鈥檚 a good choice for young people who just start their careers,鈥 he said. 鈥淚 use car-sharing to go to work, to go shopping and to go on weekend outings. I might consider buying a car in the future, when I can afford it, but for now, everything goes well with shared cars.鈥
Li is certainly not alone. According to a recent J.D. Power survey of 3,471 Chinese consumers, more than half said they are aware of car-sharing and 81 percent said they are willing to try it.
The concept of sharing cars sits well a generation that is more connected and open to new trends. Li said that he has joined a WeChat group made up entirely of car-sharing users. Most in the group are between 23 and 28 years of age, he said.
Car-sharing essentially works like bike-sharing programs. A user downloads a car-sharing app on a smartphone and completes registration by uploading his or her driving license. After selecting an available car in the desired vicinity and booking it online, the user can unlock the car via smartphone. Trip completed, the user returns the car to a designated destination or to any parking lot in the city. Payment is made online.
Car-sharing is giving it a new dimension to the world鈥檚 largest auto market. Boston Consulting Group forecasts that around 600,000 vehicles in China will generate about 80 billion yuan (US$12.6 billion) in revenue by 2021 through car-sharing and car rentals.
The group noted that the appeal of private car ownership is somewhat waning among Chinese young people in large, congested cities, where overnight parking can be a nightmare and securing a license plate tricky and expensive.
There are already more than 300 car-sharing operators in China. The sector will grow at a rate of more than 50 percent a year in the five years, according to estimates from PwC鈥檚 Strategy&. The number of shared cars in China, which totaled about 30,000 at the beginning of 2016, is expected to reach 170,000 units by 2020, the consulting firm said.
Among the largest car-sharing operators in China are EVCARD, owned by Shanghai-based SAIC Motor; Gofun Chuxing, founded by the Beijing Shouqi Group; and Daimler鈥檚 car2go and
Car2Share. The rest of the field is filled with mostly smaller companies.
鈥淲e are targeting users who have a budget of 100,000 yuan or less when it comes to buying a vehicle,鈥 said Cao Guangyu, general manager of Global Car Sharing & Rental Co, which operates EVCARD. 鈥淵oung people have drivers鈥 licenses and want to drive, but purchasing a car remains a challenge for them as they just start their careers.鈥
Despite a pretty crowded market already, new players keep entering the car-sharing sector. Last month, China鈥檚 largest ride-hailing company, Didi Chuxing, announced it has formed partnerships with 12 automakers, including BAIC BJEV, BYD and Geely Auto, to build a car-sharing platform. Didi said it will work closely with other car-sharing services, rental companies, infrastructure operators and after-sales service providers to enhance its strength in the sector.
Last month, Chinese online travel agency Ctrip officially launched its own car-sharing business in cities that include Beijing, Shanghai and Guangzhou.
Chinese bike-sharing company Beijing Mobike Technology Co also started trial operations on a car-sharing service in southwest Guizhou Province last December.
鈥淭he market has potential for further development, and competition will get fiercer,鈥 said Zhang Xiaofeng, an independent market observer. 鈥淲e see some companies like Didi and Mobike announcing plans to enter the car-sharing sector. These companies have advantages in terms of big data and customer management. The newer players are also attracted by the attention of young consumers on social platforms such as Weibo.鈥
Industry insiders said young people using car-sharing services in China are influenced by price and user experience 鈥 two factors that car-sharing operators need to heed if they want to succeed.
The operators are not short of marketing strategies aimed at the young.
EVCARD and Gofun try to attract young consumers by providing coupons through social networking platforms such as WeChat and Weibo. Coupons and other discounts are aimed at the budget realities of the young generation.
鈥淲ith coupons, car-sharing is much cheaper than taking a taxi,鈥 said Zhang Xiaojie, who works for the East China Science and Technology Journal. 鈥淲hereas a trip in a taxi would cost me 40 yuan, the coupons attached to a shared car reduce the cost to 15 yuan. We young people are price conscious, which is the biggest reason why I use car-sharing.鈥
EVCARD is also keenly aware that many young consumers like traveling with friends or family on short day or weekend trips out of town. Some of its shared cars are placed in popular visitor sites near Shanghai, such as the Yellow Mountain Scenic Area.
鈥淔or leading car-sharing operators in China, the younger generation is the clear target,鈥 German consulting firm Roland Berger said a report. 鈥淵oung consumers are highly reactive to marketing strategies such as free trial drives, discounts, coupons and free tickets to social events.鈥
Industry analysts said young consumers can be finicky when it comes to user experience.
鈥淵oung people are very picky,鈥 said independent analyst Zhang Xiaofeng. 鈥淚f a car-sharing service is inconvenient or has any problems with mobile app software, registration or operating ease, they will go to other options.鈥
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