On the same day that Ali was hotly listed on the New York Stock Exchange, another Chinese company was also listed in Hong Kong. It had subscribed for more than 200 times, and the popularity level did not lose to Ali. This company is a car rental company in China ( 10.9 , 0.14 , 1.30% , real-time quotes ) . Why would an ordinary car rental company get such a hot subscription, and where will this Internet-based car rental company be in the future?
Looking at the industry, there are currently four major types of car rental companies in China: global leasing companies led by AVIS and Hertz, traditional leasing companies represented by Beijing Crescent and Shanghai Johnson, and leasing companies led by Volkswagen and Mercedes-Benz, as well as China Car rental, rental car rental chain company. Like AVIS, Hertz is mainly a B2B model and most of them rely on foreign companies to survive. Many global foreign companies and they have signed global service chain agreements, so domestic car rental must use them, although the price is very expensive. For the new moon in Beijing, Shanghai Johnson is more of a local B2B model. Their drivers are more professional, and many top-level leaders’ car hires use them to avoid unfamiliarity with the road. And China Car Rental is more of a B2C model, benefiting from the needs of ordinary people. Moreover, their service is mainly based on vehicles, and many users do not need drivers. Unlike the previous two, they are more value-added services that require their professional drivers.
From the perspective of penetration rate, the penetration rate of the domestic car rental industry is still very low, only 0.4% in 2012, while Japan was 2.5% in the same period, the United States is 1.6%, South Korea is 1.4%, Brazil is 1.3%. In addition, the concentration of the Chinese market is also very low. The top five rental car companies in the United States monopolize the 95% car rental market, 90% in Germany, and the top five car rental market in China is only 14%. The problem behind this is that the B2B and B2C markets are completely fragmented. B2B car rental companies have either more global brands (AVIS, Hertz) or they can get government or state-owned companies (Shanghai Johnson & Johnson). The segmentation market for China’s car rental is B2C's common people, and they care more about prices. You make GE, Sinopec [microblogging], the US consulate and other large companies to hire these Shenzhou car rental service is currently looking unlikely. However, the good news is that the future of B2C is the development of the mainstream, which is consistent with the overseas market.
For China Car Rental, this is not the first time to submit an IPO application. The company submitted a listing application on the Nasdaq [microblogging] As early as 2012, but they are asset-heavy expansion of this model are not recognized by investors. Therefore, the listing application was withdrawn and it was listed in Hong Kong this year. Prior to the listing, Hertz, the world's largest car rental company, also took a 20% stake in the company and obtained a board seat.
From a business model, car rental is without a doubt its greatest source of income. The proportion of revenue in the first quarter of 2014 was as high as 85.6%. However, the proportion of sales of another used car has slowly risen in the past few years, rising from 5.3% in 2011 to 14.4% in the first quarter of 2014. The sale of used cars is a good way to get rid of the “heavy asset†model that is being criticized. Unlike traditional industries, after the heavy assets of China Shenzhou Car Co., Ltd. were expanded, these assets could still be realised and even made gains. Instead of traditional businesses, the purchased equipment (assets) must eventually be fully depreciated. The company currently has three channels for selling used cars: free bidding and auctions, third-party auction companies, and other offline sales. The company's total vehicle fleet is 52,498 vehicles. Of these, 35,602 were short-term leases, 5,946 were for long-term leases, 4,475 were financial leases, were retired for sale, and approximately 6,500 were suspended due to violations.
Currently, Shenzhou Car Rental has a share of 31% in the short-term rental market, which is the absolute leader in the industry and is significantly ahead of the 8.1% of rental car rental. After this listing, I believe that the moat of Shenzhou Car Rental will be deeper. What are the most important factors in the short-term rental industry? Capital expenditure and brand. After the Shenzhou Car has passed the listing, the two moats will be consolidated. It can be said that if its competitors can't finance afterwards, then there is almost no chance to narrow the gap with China Car Rental.
The company's future is relatively optimistic. From the comparison between China and the United States, it is found that renting a car in the United States is a very natural part of tourism. A large piece of business from AVIS and Hertz also comes from travel car rental. Recently the National Day holiday approached, many friends went to the United States to rent a car and enjoy the beautiful natural scenery on the road. Large UTAs such as Priceline offer car rental services in the United States. The car rental service in China is just beginning. The future of travel must be more and more personalized, rather than following the bus of the tour group. Therefore, car rental will become a very important one-stop service for self-service travel. Another, with restrictions on the purchase and congestion of licenses in Shanghai, Beijing and other places, there may be some users who will abandon the purchase of cars in the future and start to rent cars (such as the occasional weekend rental car). This is the same with many people who live in Manhattan, New York, and face high parking fees. Therefore, from the perspective of industry growth, car rental is still in a period of rapid growth. In addition, the “burning money†of China’s car rentals over the past few years has created a very strong proportion (a vehicle fleet with a book value of more than 4 billion, a network of outlets across the country and a team of 5,000 people). This is very similar to Jingdong.
Therefore, in the long run, Shenzhou Car Rental will maintain a very high market share and certainty in a high-growth industry, and the outlook is still tempting.
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