Farewell, P2P Car Rental Service Providers

摘要: P2P car rental service providers failed to effectively match the needs of car owners and car users and therefore didn’t even meet the fundamental principle of sharing economy.

(Chinese Version)

Didi and Uber, two of the largest car-hailing service providers in China, are known to refuse nobody when expanding their businesses. For example, when Koala Bus was desperate to sell itself when its money ran out, only Didi was willing to buy it, which definitely gave a silver lining to every entrepreneur: after all, Didi will buy us.

However, why didn’t Didi and Uber buy P2P car rental companies? Some might argue that these companies developed pretty well and wouldn’t sell themselves. Really? I doubt that.

In the US, ride-sharing companies focused on different aspects of the business used to rise and develop at the same time. P2P car rental companies such as RelayRides and GetAround used to be two of the most promising players in the industry. However, when Zipcar, the father of P2P car rental business, was acquired by the long0time vehicle rental services provider AvisBudget, the fad for P2P online car rental business gradually ebbed away, and online car-hailing service providers such as Uber and Lyft caught behind.

The same thing happened here in China. The Singapore-based P2P car rental company iCarsClub didn’t learn from Zipcar’s lesson and didn’t enter mainland China until October, 2013, while Kuaidi Dache had already received an investment of 10 million USD in the A-round financing led by Alibaba in April, and Didi Dache also received an investment of 15 million USD in the B-round financing led by Tencent in June. Soon, Didi and Kuaidi were connected to WeChat Wallet and Alipay, and a price war between Didi and Kuaidi ensued. So it was already too late for P2P car rental companies to play a role.

Although these companies did receive some sort of investment in 2014 thanks to the craze for sharing economy, they lagged far behind Didi, Uber and Lyft in terms of the GWV. When RelayRides and GetAround both received an investment of 24 million USD in the B-round financing, their market value was estimated to reach only 200 million USD, much lower than that of a typical unicorn startup. How can we expect them to compete with car-hailing service providers worthy of tens of billions of USD?

On the one hand, P2P car rental service providers were at a disadvantage over the much more mature car rental companies such as CAR Inc and eHi Car Serivces, since their services were less frequently demaned.

On the other hand, car-hailing service providers’ car-sharing service and Zhuanche (honorable VIP car-hailing service) are cheaper and more frequently demanded, P2P car rental companies’ users are mostly inactive.

In this case, P2P car rental companies were outperformed by both the online car-hailing service providers and traditional car rental companies. What a shame.

Still, is it meaningful to add P2P car rental service to Didi and Uber’s platform?

Didi’s president Liu Qing once pictured Didi’s business as follows: Didi Zhuanche is more like a three-star hotel, Didi ACE Zhuanche is similar to Shang-Rila Hotel, Didi Shunfengchem(Didi’s car pooling service) is like a family hotel, and Didi Kuaiche (Didi’s public car-sharing service) is like Home Inns and should meet the need of the general public.

If so, it sounds like a good idea for Didi to add P2P car rental service to its platform and fill in the gap of its business scale.

But what kind of product du Didi and Uber need most right now?

1. Contributing to their GMV;
2. Profitable;
3. Creating room for expectation among investors.

So does P2P car rental companies meet the above three requirements?

First of all, if they can contribute to the GMV to Didi and Uber, why didn’t they develop on their own?

Secondly, they won’t be profitable in the foreseeable future because they have no place in the lucrative public car rental market, they have given up the opportunity to promote their brand by improving offline user experiences when they have already built an image of cheap in users and there are too many substitutes for rice-sensitive users.

To wrap up, Didi did want to further expand its business scale, as can be seen in its recent investment into Test Drive service. Yet, P2P car rental service is definitely out of the question.

Players in the sharing economy have to effectively meet the needs of car owners and car users to succeed, yet P2P car rental service providers failed to satisfy both car users and car owners. To be more specific:

While Didi, Uber and Yongche are endeavoring to provide the best user experience for their users, whether through subsidies, dispatch system, or even user-pick system, users of P2P car rental service can hardly rent a car or have got to pay in advance, while car owners can still cancel orders as they like. In addition, car owners prefer to rent their cars for a day, a week and even a month since they can make much more money this way. Imagine the huge dissatisfaction among users.

In this case, P2P car rental service providers failed to effectively match the needs of car owners and car users and didn’t even meet the fundamental principle of sharing economy.

Worse still, their only chances are gradually blocked:

1. Didi is gradually establishing its own “car force” by recruiting new drivers whether on itself or through its subsidiary car rental companies.

2. Although it is theoretically feasible for car owners to share their car with others on their way to work, rent their cars to Zhuanche drivers for the entire day and then share their ride back home when Zhuanche drivers gave back their cars after work, I believe unmanned driving cars will appear sooner than such model.

However, P2P car rental companies are trying their best to save themselves. When iCarsclub China’s Wang Jiaming realized that their P2P car rental model could never compete with that of traditional car rental companies such as CAR Inc, he did work out some approaches to help out:

First of all, he believed that GMV on iCarsclub should be much higher than that of traditional car rental companies since it was more convenient, yet it was mere assumption and soon proved nonsense when it failed to control car owners on its platform and maintain a steady “car force”.

Secondly, P2P car rental service can be added to all kinds of car sharing platforms and user scenarios. As a matter of fact, nobody will think of renting a car from another guy when they can just hail a car, share a car through Didi, Uber and Yongche.com.

At last, he used to believe that social elements can be added to the P2P car rental model and help connect a community. It turned out that this was mere daydreaming, and no user would even try to do so.

In conclusion, there is little chance for P2P car rental service providers to survive. The harsh fact it that they have been driven out of the market, not the other way around as it used to attempt to.

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[The article is published and edited with authorization from the author @Chonger, please note source and hyperlink when reproduce.]

Translated by Levin Feng (Senior Translator at ECHO), working for TMTpost.




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