汽车租赁行业报告(英文)

INDUSTRY Overview of China's car rental and car service industry

Market overview Car rental market.

Car rentals refer to rental of a vehicle driven by the customer for a

specified period of time. The car rental market primarily consists of two types of service

offerings: (i) short-term car rentals, which have a term of less than one year and are primarily targeting individual customers, and (ii) long-term car rentals, which have a term of one year or longer and are primarily targeting corporate clients.

Car service market. Car services refer to rental of a vehicle accompanied by a driver for a specified period of time, which primarily target corporate clients.

China's car rental and car service industry is still at an early stage of development and has experienced rapid growth in recent years. According to Frost & Sullivan, the total market size of China's car rental and car service industry grew from RMB10.7 billion in 2009 to

RMB29.7 billion in 2013, representing a CAGR of 29.1%. Frost & Sullivan projects that the total market size of China's car rental and car service industry will continue to grow to

RMB56.3 billion by 2017, or representing a projected CAGR of 17.3% from 2013 to 2017.

Such growth rate, however, as well as other industry projections made by Frost & Sullivan

and disclosed in this prospectus, are not guaranteed.

The table below sets forth the total market size of China's car rental and car service

industry by revenues for the periods indicated:

Total market size of China car rental and car service industry by revenues, 2009–2017E

Source: Frost & Sullivan

When compared to car rental and car service industry in other developed markets, China's market today is characterized by relatively low penetration rate and high level of market fragmentation: Low penetration rate. The car rental and car service penetration rate refers to the aggregate number of rental and service vehicles divided by the aggregate number of passenger vehicles in the relevant country or region. According to Frost & Sullivan, the penetration rate is an important indicator of the maturity of a car rental and car service market. In 2013, the penetration rate in China was 0.4%, which was significantly lower than that in the United States (1.7%), Japan (2.6%) and Korea (2.5%), according to Frost & Sullivan. The relatively low penetration rate in China indicates a strong potential for future growth. The chart below sets forth the car rental and car service penetration rates in different

countries in 2013:

Car rental and car service penetration rate in 2013

Source: Frost & Sullivan

High market fragmentation. China's car rental and car service industry is highly fragmented. According to Frost & Sullivan, the top three players in aggregate accounted for 10.7% of China's car rental and car service industry in 2013. By contrast, other countries have witnessed and currently enjoy much higher degrees of consolidation. For example, according to Frost & Sullivan, in 2013, the market share of the top three players reached 95.4% in the United States, 32.4% in Japan and 48.1% in Korea. Therefore, we believe that consolidation presents an opportunity in China's car rental and car

service industry. The chart below sets forth the market share of the top three players in the car rental and service industry of different countries in 2013:

Market share of the top three players in the car rental and service industry in 2013

Source: Frost & Sullivan

Competitive landscape

Key players in China's car rental and car service industry include private-owned companies, such as eHi and China Auto Rental, and affiliates of state-owned automobile manufacturers in China such as Shouqi and Dazhong. International car rental and service companies primarily compete through partnership with domestic car rental and service companies. For example, Enterprise, the largest car rental and service company in the world, is our strategic shareholder, while Hertz and Avis have invested in and partnered

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with China Auto Rental and Shanghai Automotive, respectively. The chart below sets forth the market share of the top three players in China's car rental and car service industry in 2013 by revenues:

Market share of the top three players in China's car rental and car service industry

by revenues, 2013

Source: Frost & Sullivan

Competition among car rental and service companies is primarily based on, among other things, brand recognition, network coverage, price, quality and convenience of services, ability to provide tailored services, operating efficiency and variety of service offerings.

China's car rental market

Market size

The car rental market primarily consists of two types of service offerings: short-term car rentals and long-term car rentals, which are targeting different types of customers and service needs. Demands for short-term car rentals primarily come from increasing leisure travels by individual customers and general car usage needs of licensed drivers who do not own cars. Demands for long-term car rentals primarily come from car usage needs of corporate clients who seek to enjoy the flexibilities of

alternative car ownership. According to Frost & Sullivan, the market size of China's car rental market, as measured by revenues, has increased from RMB9.4 billion in 2009 to RMB26.7 billion in 2013, representing a CAGR of 29.8%. Frost & Sullivan estimates that the market size of China's car rental market will continue to grow to RMB51.0 billion by 2017, representing a projected CAGR of 17.6% from 2013 to 2017. Correspondingly, the fleet size of China's car rental market has increased from 128,962 units in 2009 to 361,470 units in 2013, representing a CAGR of 29.4%, and is expected to continue to grow to 674,762 units by 2017, representing a projected CAGR of 16.9% from 2013 to 2017, according to Frost & Sullivan.

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Competition and key players

China's car rental market has witnessed leading players emerging from previous years of

competition. According to Frost & Sullivan, the top three players in this market in aggregate accounted for 10.8% of the market share by revenues in 2013:

Market share of top three players in China's car rental market by revenues, 2013

Source: Frost & Sullivan

Competition among car rental providers is primarily based on, among other things, rental price, user experience, brand recognition, convenience of service locations, geographic coverage and service quality.

Growth drivers for the short-term car rental market

Increasing number of driver's licenses holders who do not own cars. According to Frost &

Sullivan, there were 137.0 million driver's license holders and 34.5 million passenger vehicles in China as of December 31, 2009, implying 102.5 million driver's licenses in excess of the number of passenger vehicles in that year. More recently, according to Frost & Sullivan, there were 217.0 million driver's license holders and 88.2 million passenger vehicles in China as of December 31, 2013, implying

128.8 million driver's licenses in excess of the number of passenger vehicles. Hence, the number of driver's license holders in China who do not own cars has been increasing, and is expected to continue to increase, due to car purchase restrictions in many China's cities, considerable costs of car ownership, including the purchase price of the car, license plate quota, fuel, parking, repair and maintenance and

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insurance. The chart below sets forth information on the number of licensed drivers and passenger vehicles in China in the periods indicated:

Number of driver's license holders and passenger vehicles in China, 2009–2017E

Source: Frost & Sullivan

Increasing demand for leisure travel. Leisure travel usage is a major purpose for car rental services, as tourists increasingly favor an efficient and less-hassle one-stop transportation solution to destinations. As disposable income per capita increases rapidly in China, domestic travel activities have increased significantly. According to Frost & Sullivan, domestic tourist arrivals grew from

202.8 million people in 2009 to 339.1 million people in 2013, representing a CAGR of 13.7%. The substantial increase in domestic travel activities has also resulted in significant growth in domestic travel activities spending, which increased from RMB1,290 billion in 2009 to RMB2,948 billion in 2013, representing a CAGR of 22.9%, according to Frost & Sullivan. As China's economy and

disposable income continue to grow, leisure travel activities in China are expected to increase further, which in turn, we believe, will drive

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up the demand for this market sector. The chart below sets forth information on the domestic tourist arrivals and tourism consumptions in China for the periods indicated:

Domestic tourist arrivals and tourism consumptions in China, 2009–2017E

(arrivals in million)

Source: Frost & Sullivan

Shift in lifestyle towards driving as a preferred means of travel. With increased wealth, people in China are changing their lifestyles to increasingly accept and embrace driving as a preferred means of travel, which will benefit the car rental and service industry in China. Unlike older generations, which generally prefer to participate in organized group tours, the younger generation prefers more fashionable and flexible travel plans—such as being able to drive to their destinations and book

accommodation by themselves. Given the low car ownership penetration rate, many young people who do not have their own cars, may choose to turn to car services. In addition, urbanization and increasing disposable income in China has led to rising middle-class consumers in recent years, who have strong

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spending power on leisure travel and new lifestyles. The chart below sets forth the different types of consumers in China:

Different types of consumers in China

Source: Frost & Sullivan

We believe most leisure travelers are value-conscious and expect such travelers to increasingly consider self-drive car services as their preferred choice of leisure travel transportation in order to benefit from enhanced efficiency and intimacy.

Surging passenger throughput from high-speed railways and airlines, and improved accessibility of metropolitan areas by car. The rapid pace of development in national high-speed railway network and growing airline passenger throughput has significantly boosted the demand for last-mile car services, for both leisure and business travelers. According to Frost & Sullivan, domestic high-speed railway traffic volume has increased from 170 million passengers in 2009 to 530 million passengers in 2013, representing a CAGR of 32.9%. At the same time, the domestic air traffic volume has steadily increased from 231 million passengers in 2009 to 356 million passengers in 2013, representing a CAGR of 11.5%. We believe that the rapid expansion of China's high speed railway network, as well as the steady increase in air traffic volumes, will continue to generate strong demand for short-term car rental

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services as a last-mile solution for both leisure and business travelers. The following charts set forth the domestic high-speed train traffic volume and domestic air traffic volume for the periods indicated: High-speed train traffic volume in China,

2009–2017E

(arrivals in million) Air traffic volume in China, 2009–2017E (arrivals in million)

Source: Frost & Sullivan

Increasing Internet and mobile penetration. The increasing trend of using the Internet, both PC and mobile, has had a significant impact on the car rental and service market via online bookings and personalized services, making it convenient for both customers as well as car rental and services providers. According to Frost & Sullivan, from 2009 to 2013, the Internet and mobile Internet

penetration rate has increased from 28.8% and 17.5% to 45.4% and 36.7%, respectively. The Internet and mobile boom in China is anticipated to continue to facilitate the growth of the car rental market

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by streamlining the car rental process and enhancing user access. The following charts set forth the internet and mobile penetration rates in China for the periods indicated:

Overall internet penetration rate in China

Mobile internet penetration rate in China

Source: Frost & Sullivan

Potential demands from government institutions and officials. Historically, government officials in China typically used government-owned vehicles, or official vehicles, when performing official duties. In July 2014, the PRC government initiated a reform program of official vehicle system, which aims to control the use of official vehicles and encourage government officials to opt for alternative modes of transportation. For example, as a measure of saving government spending, the PRC

government issued a guidance on July 16, 2014, pursuant to which official vehicles could only be used for special government affairs or by high-level government officials. As a result of such reform

program, a large number of official vehicles are expected to be disposed of, and government officials are expected to increasingly choose other transportations as alternatives to official vehicles, which indicates a potential increase in demand for short-term car rentals.

Growth drivers for the long-term car rental market

Increased car use by corporate clients. Car use by corporate clients is the key driver for long-term car rental market. With China's expected steady GDP growth, increased car use by corporate clients is expected to continue to drive the growth of China's long-term car rental market.

Maintenance, repairs and fleet management services provide an important value-added

service. Maintenance, repair and fleet management services accompanied by long-term car rentals provide additional attractions to corporate clients to use long-term car rentals to save the hassle of maintaining their own fleets.

Financial flexibilities and tax benefits for businesses. Long-term car rentals help to lower corporate clients' tax expenditures and also provide the benefits of financial flexibilities as compared to car purchases, which is a key incentive for corporate clients to use long-term car rentals as the primary means of having a corporate fleet.

Potential demands from government institutions and officials. Historically, government officials in China typically used government-owned vehicles when performing official duties. In July 2014, the PRC government initiated a reform program of official vehicle system, which aims to control the use of official vehicles and encourage government officials to opt for alternative modes of transportation. For

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example, as a measure of saving government spending, the PRC government issued a guidance on July 16, 2014, pursuant to which official vehicles could only be used for special government affairs or by high-level government officials. As a result of such reform program, a large number of official vehicles are expected to be disposed of, and government officials are expected to increasingly choose other transportations as alternatives to official vehicles, which indicates a potential increase in demand for long-term car rentals.

China's car service market

Market size

The car service market targets corporations and business travelers as the main customers. With increasing number of corporations and business activities in China, the market size of China's car service market, as measured by revenues, has increased from RMB1.3 billion in 2009 to

RMB3.0 billion in 2013, representing a CAGR of 23.3%, and the fleet size has increased from 6,338 units in 2009 to 13,530 units in 2013, representing a CAGR of 20.9%, according to

Frost & Sullivan.

Driven by the continued growth of economy and increasing car usage among corporations, the market demand for car services is expected to maintain a stable growth. According to Frost & Sullivan, the market size of China's car service market is expected to further increase to RMB5.2 billion by 2017, representing a projected CAGR of 14.8% from 2013 to 2017, and the fleet size is expected to further increase to 21,679 units in 2017, representing a projected CAGR of 12.5% from 2013 to 2017.

In addition, although the taxi market has not been included when measuring the size of China's car service market, the growth of China's taxi market illustrates growing demands for car services from

individual customers, and potential growth in China's car service market targeting individual customers. The chart below sets forth China's taxi market size by revenues for the periods indicated:

China's taxi market size by revenues, 2009-2013

Source: Frost & Sullivan

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Competition and key players

According to Frost & Sullivan, the top three players in China's car service market in aggregate accounted for 11.6% market share in 2013, as measured by revenues. The chart below sets forth the market share of the top three players in China's car service market in 2013:

Market share of the top three players in China's car service market by revenues, 2013

Source: Frost & Sullivan

Competition among car service providers is primarily based on, among other things, quality and convenience of services, ability to provide tailored services, brand recognition, network coverage, and to a lesser extent, service charge. Along with the increasing car usage of corporate clients, as well as the increasing acceptance level of chauffeur services, market consolidation is expected to progress, with the large and currently more established players displaying a strategic advantage over smaller players.

Growth drivers for the car service market

Increased business activities and car use by corporate clients. Car use by corporate clients for business travels is the key driver for car services. With China's expected stable GDP growth, increasing business activities are expected to continue to drive the growth of the car service market.

Surging passenger throughput from high-speed railways and airlines, and improved accessibility of metropolitan areas by car. The rapid pace of development in national high-speed railway network and growing airline passenger throughput have significantly boosted the demand for last-mile car services, for both leisure and business travelers. According to Frost & Sullivan, domestic high-speed railway traffic volume has increased from 170 million passengers in 2009 to 530 million passengers in 2013, representing a CAGR of 32.9%. At the same time, the domestic air traffic volume has steadily increased from 231 million passengers in 2009 to 356 million passengers in 2013, representing a CAGR of 11.5%. We believe that the rapid expansion of China's high speed railway network, as well as the steady increase in air traffic volumes, will continue to generate strong demand for car services as the most efficient last-mile solution for both leisure and business travelers.

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Potential demands from government institutions and officials. Historically, government officials in China typically used government-owned vehicles when performing official duties. In July 2014, the PRC government initiated a reform program of official vehicle system, which aims to control the use of official vehicles and encourage government officials to opt for alternative modes of transportation. For example, as a measure of saving government spending, the PRC government issued a guidance on July 16, 2014, pursuant to which official vehicles could only be used for special government affairs or by high-level government officials. As a result of such reform program, a large number of official vehicles are expected to be disposed of, and government officials are expected to increasingly choose other transportations as alternatives to official vehicles, which indicates a potential increase in demand for car services.

China's used car market

According to Frost & Sullivan, sales volume of China's used car market has grown from 2.0 million units in 2009 to 3.4 million units in 2013, representing a CAGR of 15.0%, and sedan accounted for a majority of the used car market in 2013, as measured by sales volume. As China's automobile market continue to develop and mature, the used car market is expected to grow rapidly, driven by growing fleet size, an increasing number of OEMs, auto dealers entering and promoting the development of used car market and increasing acceptance by consumers towards used cars. Frost & Sullivan estimates that the sales volume of China used car market is expected to further increase to

4.7 million units by 2017, representing a projected CAGR of 8.4% from 2013 to 2017. The chart below sets forth sales volume of China's used car market for the periods indicated:

Sales volume of used passenger vehicles in China, 2009–2017E

(units in thousands)

Source: Frost & Sullivan

Used cars are primarily sold through various retail channels in China, such as dealers and brokers. China's government is expected to introduce a series of policies, such as more detailed industry

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standards and more favorable tax treatment, which is expected to contribute to the continued development of China's used car market.

China's peer-to-peer car sharing market

Peer-to-Peer, or P2P, car sharing is a mode of transportation, wherein vehicles are shared between a number of individuals at different times via a third-party car sharing platform. Major benefits of P2P car sharing include reducing parking demand, pollution and fuel consumption, as well as maintaining proper number of passenger vehicle ownerships. Compared to traditional transportations, P2P car sharing is a more convenient, flexible and cost-effective transportation for consumers.

The P2P car sharing market has experienced rapid expansion worldwide, as the total numbers of car sharing members and vehicles in North America are expected to grow from 126,911 and 22,315 in 2013, respectively, to 399,917 and 63,968 in 2017, respectively, representing a projected CAGR of 77.5% and 69.3% from 2013 to 2017, respectively, according to Frost & Sullivan. The chart below sets forth the P2P car sharing members in North America for the periods indicated:

P2P Car Sharing Members in North America

Source: Frost & Sullivan

The concept of P2P car sharing has just been introduced into China. The market demand of P2P car sharing services as well as the numbers of P2P car sharing members and vehicles in China have increased significantly during this short period, according to Frost & Sullivan.

As of December 31, 2013, there were 217.0 million people holding driver's licenses and

88.2 million passenger vehicles in use in China, according to Frost & Sullivan. To reduce the pressure of public transportation, the PRC government has published a series of policies, including restrictions on issuing driver's licenses and new vehicle plates. As demands for private cars keep increasing, P2P car sharing has become one of the effective solutions. As more consumers accept this transportation mode and recognize such benefits, P2P car sharing market in China is expected to reveal great potentials as North America market.