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Car-sharing service brings convenience and concerns

2016-December-16       Source: Szdaily.com

A car-sharing app called TOGO is gaining wide attention on social media after the app's operator launched the car rental service in Shenzhen, which allows users to rent Smart microcars as easy as renting a bike on their phones.

An app-based rental car in Nanshan District. SD-Agencies

A car-sharing app called TOGO is gaining wide attention on social media after the app's operator launched the car rental service in Shenzhen, which allows users to rent Smart microcars as easy as renting a bike on their phones, the Shenzhen Evening News reported Thursday.

Many Shenzheners are familiar with Mobike — a bicycle rental app that allows users to rent and return bikes at public bicycle parking locations. Similarly, users can check available cars nearby on TOGO, unlock the cars with their phones and return the cars at any legal parking space.

The calculation of rental fees is based on how long the car is used and how far it goes. Even though most of TOGO's cars are located in Nanshan District, the app has made a name on social media, followed by people's concerns about troubles it might cause.

Many people have said that they had trouble registering their driving licenses with the app, and that those whose driving licenses were issued within six months weren't able to use the app.

Additionally, users have to pay a deposit of 1,500 yuan (US$216) before they can rent a car, which will be fully refunded if users don't commit any traffic violations while using the car. However, the refunds might be delayed as updates to traffic violation records are only released online by the traffic police 24 hours after traffic tickets are issued.

A user, surnamed Li, said that paying parking fees is a big headache, because the following user has to pay the car's parking fee after the previous user parks it somewhere.

"I had to pay 40 yuan when I drove the car out of a parking lot. Even though TOGO offered virtual money on the app as compensation, it was far from enough to cover the parking fee," he said, adding that the app should show a car's estimated parking fee for users.

The shortage of parking spaces in Shenzhen is another problem. There were over 3.2 million vehicles in Shenzhen last year, with only 1 million registered parking spaces available. Also, disputes might ensue if a user parks a car in a private parking space.

Lu Zhenwang, CEO of Wanqing Consulting, said that it's hard to find a practicable business model for consumer-to-consumer car-sharing services, because of the higher maintenance requirements for cars and the risks of using rental cars.

It's also difficult to hold users responsible after an accident takes place, because small damage to cars might be ignored as users can return cars without operators having an opportunity to fully inspect them. Many app-based rental cars in Beijing and Chongqing, where car-sharing services are more mature, were left broken-down and dirty in parking spaces.

Shou Lingchao, investment manager of Ether Capital, said that all of the companies in the time-share car rental industry are losing money. He said that the operators could only make a profit if each of their cars were leased out four times a day and used for longer than 45 minutes each time. "But car usage rates on most car rental platforms barely reach half of standard usage rates," he said.

Yang Yang, an entrepreneur in the car rental industry, said that the daily cost of maintaining an 80,000-yuan car is 240 yuan, meaning the rental fee should be above 65 yuan per hour for the operator to recover the cost, which might be considered too expensive by customers.

Still, many people believe that sharing is the best way of using resources, and car-sharing services will become another possible way for people to travel.

In 2014, the car-sharing platform DriveNow, which is operated by BMW, reached its breakeven point, which was considered a landmark event that showed the business value and potential of the car-sharing industry.

Roland Bergen, a leading strategy consultancy in Europe, anticipates that the car-sharing market in China will grow by 80 percent annually in the coming five years.

There are 140 million more people with driving licenses in China than the number of civilian vehicles in the country, meaning that theoretically there is a larger demand for sharing cars in China than in many other countries, according to the News report.

Editor: Chan

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