Focus

Rental vehicle company CEO chases a big catch in the promising industry

By Shen Jingting (China Daily)
Updated: 2010-07-26 15:51

Charles Lu proudly recounts to visitors how he recently caught a nine-kilogram snakehead fish on a trip to Canada.

He had to sit stock still in the dark for 12 hours, with only voracious mosquitoes for company, but it was worth it, according to Lu.

"The fish was taller than my friend's five-year old son," he said as he beamed.

Charles Lu says he wants more people to realize that renting cars may be better than buying cars. [Provided to China Daily]

But Lu says he is after an even bigger catch: China's booming rental car market.

The 40-year old Lu is founder and CEO of China Auto Rental Ltd, the largest car rental company in the country.

Compared with the United States, which boasts more than 5 million rental cars, China, which has a mere 200,000 at present, has a model car rental market.

But the number of cars available for rent in China will double in five years, Lu estimates. He is also confident that in less than 10 years, China will be home to the world's largest car rental company, which he hopes will be China Auto Rental.

The company has 2,000 rental cars across the country, but by the end of this year, the figure is supposed to jump to 10,000, including more than 1,000 in Beijing.

"We have served 300,000 individual clients since China Auto Rental set up in 2007 and that number is rising all the time. Companies such as Citibank, Air China and Ctrip.com are our business clients," Lu said.

Most of the company's clients cannot afford to buy cars at present, but want to travel on holidays.

"I want more people to realize that renting cars may be better than buying cars, so they will choose rental cars as daily transportation tools, instead of thinking about them only for trips," Lu said.

Lower car rental rates may help, he said, because at present, renting a car costs up to 638 yuan a day, depending on the type of vehicle.

Lu's company recently secured $200 million in funding, which it will use to purchase more cars and build a nationwide network.

"Economies of scale apply to the car rental business. The larger you are, the lower costs you will have and the lower prices you can pass on to your customers," Lu said.

Starting Aug 1, car rental prices at China Auto Rental will reduce by at least 30 percent.

Its Buick Excelle rental for example, will cost 199 yuan per day, 89 yuan lower than its current rental price.

Lu said more Chinese people might soon realize that, given maintenance and repair fees, renting a car is a better choice for them than buying.

China Auto Rental expanded rapidly from its launch in 2007 to the breakout of global financial crisis.

Then business shrank for a while because people were reluctant to spend extra money in renting cars.

But since the start of this year, business has been booming again, according to Lu, and the company is considering a public listing in 2013.