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ASIA 1/13/2015 @ 9:45AM 3,253 views

Managing The Dragon's China Predictions For 2015

http://www.forbes.com/sites/jackperkowski/2015/01/13/managing-the-dragons-china-predictions-for-2015/


Chinese companies will set a new record in 2015.

Prediction #5: Car Sharing Will Become A Growing Trend In China’s Auto Industry, Spurring Demand For Electric Vehicles

Although China’s increasing wealth will continue to drive the growth of car ownership, severe air pollution and traffic congestion have led a number of large Chinese cities to take actions to limit the growth in the number of private cars. Beijing, Shanghai, Guangzhou, Guiyang, Tianjin and Hangzhou already limit the number of vehicles registered each year through various means. While Beijing and Guiyang issue plates through a lottery, Shanghai uses a bidding scheme. Guangzhou and Tianjin use both systems.

Aside from government restrictions, and despite increasing per capita incomes, many Chinese consumers still cannot afford the car of their dreams, particularly when the cost of maintenance and parking are taken into account. Many Chinese consumers would prefer access to a car, but do not necessarily need to own a car.

For China’s cities, and for many of Chinese consumers, car sharing programs can help reduce the number of cars on the streets, while at the same time, meet China’s increasing demand for personal mobility. Car sharing programs come in a variety of forms.

Station-based car sharing programs offer vehicles at designated car sharing stations within a defined service area. Depending upon availability, cars can be reserved spontaneously or in advance by phone, website or smartphone application. Free floating car sharing programs provide vehicles without designated car sharing stations for spontaneous car access for short trips within a defined area. The cars, which can be located by service hotline, website or smartphone application, are parked in legal parking spots within a defined area. Reservations are not required, and are typically made only for short periods of time — 15 to 30 minutes. Finally, peer-to-peer car-sharing companies provide a platform for members to rent vehicles owned by other members in the network.





Whatever the form, car sharing is growing in China. In 2012 there were only two car-sharing operators, with a total of 39 vehicles in Chinese cities. Today, China’s car-sharing network has grown to a total of 1000 vehicles with five active operators in Beijing, Hangzhou, Wuhan, Shenzhen and Changsha. In its study, “Sharing the future – Perspectives on the Chinese car-sharing market,” Roland Berger Strategy Consultants predict annual growth of about 80 percent in China for the next five years.

The growth in car sharing will also provide new demand for electric vehicles because these programs tend to mitigate the disadvantages of high cost, range and the availability of charging stations normally associated with electric vehicles. An emphasis on low cost and affordability, however, means that the prime beneficiaries of this trend will be the growing number of manufacturers of small and affordable electric vehicles, not necessarily the manufacturers of expensive luxury models.