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Car-sharing market floundering
Published on: 2017-03-20
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030Chinese companies in the car time-sharing business are facing the risk of insufficient cash flow, as they are relying heavily on funding while burning bank notes for vehicles and car plates, industry insiders said.

Car time-sharing is also known as short-term car rental.

One of the players in the field is Uucars, recently ceased operation and announced that users will receive their returned deposit in about one week.

The operator, Beijing Youyou Lianchuang Information Technology, was unable to sustain the business because the investment deal agreed upon last year has not been received as expected, despite having raised $16 million.

Analysts view the boom in car time-sharing as a possibility for the future, but break even is not among the possibilities, not to mention turning a profit.

"The charges are pretty low while the users are few, with users paying tens of yuan on half-hour or even shorter rides," said Yale Zhang, managing director of Automotive Foresight (Shanghai), a company that offers consultancy services.

Uucars charged a fare determined by both time and distance, a typical drive costing 0.8 yuan per kilometer and 0.09 yuan per minute.

Insurance and gasoline are included in the fare, but users must pay a 1,000-yuan deposit in advance.

The company almost broke even in each vehicle's operation, but the deficit arose after deducting the costs of personnel and housing rentals.

The company operated a fleet of more than 300 new energy vehicles during its peak, but the majority of them were rented from other traditional car rental companies.

Strategy&, a subsidiary of PricewaterhouseCoopers, noted in a report that "almost all car ride providers' books remain in the red, with each car losing 50 to 120 yuan a day," in its recent research report.

The report predicted car-sharing services will see fast growth in China in the coming years, and the fleets of such service providers are expected to reach a collective 170,000 cars by 2020.

More than 350 companies are currently involved in the car sharing industry, including car manufacturers, rental companies and startups like Uucars, according to Yang Yang, CEO of New Harmony Commercial Factoring Co, a car sharing solutions provider.

Both of Uucars' co-founders agreed that the sector deserved attention from many stakeholders, including local governments, car manufacturers and charging facility operators, and that they saw advantages in those players backed by carmakers and State-owned enterprises.

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