Car-on-demand services set to overturn traditional players

A Chinese employee talks with a visitor at the stand of online car rental service provider yongche.com or Yidao Yongche during the 2014 Global Mobile Internet Conference (GMIC 2014) in Beijing, China, May 5 2014.[Photo/IC]

The recent merger of China's two largest taxi-hailing applications, backed by Alibaba and Tencent, sparked another concern over monopoly and is seen as a move to get ahead of the chauffeured car business.

"The marriage of the two deep pockets may not be a perfect match, and they may involve some challenges in the antitrust field," said Zhu to chinadaily.com.cn.

"We were not surprised with the news, but the merger cannot resolve their existing shortcomings, as their vehicles remain unchanged. Problems about the source and their car supply are still there," said a senior manager overseeing the chauffeured car business who wished to stay anonymous.

New business model

To leverage on the fast-growing business opportunities, players have been hoarding capital and eyeing new expansion opportunities.

Yidao announced in January that it has set up a joint venture with Haier Financial Services, the financial arm of Chinese consumer electronics maker Haier Group with 8 billion yuan ($1.28 billion), targeted at car rental services and car leasing.

"If taxi-hailing apps are information-sharing hubs for drivers, taxi companies and individual passengers, then chauffeur-driven car-on-demand apps are not just an Internet-based service, but a service that disrupts the traditional car rental industry," said Zhu.

She expects that more products and business models will appear on the market in years to come, aimed at luring customers who require a better travel experience.

"We hope consumers come to us whatever their needs for car are," said the CEO of CAR. Positioning itself as to a comprehensive entry point for mobile transport, the company went public in Hong Kong in September and plans to expand into P2P rental and car-pooling services.

"After thorough market research and analysis, we are prepared to throw huge capital into the chauffeured car business. The subsidy will continue to customers'heart's content," said Lu.