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China's biggest car rental company enters the used-car business

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A man takes a look at second-hand BMW cars at a dealer shop in Beijing, China, Sept 11, 2015. Car Inc will begin selling used cars next month to retail buyers as China's biggest rental company seeks new avenues for growth.

[BEIJING] Car Inc will begin selling used cars next month to retail buyers as China's biggest rental company seeks new avenues for growth.

The company will start with sales in eight cities and expand to about 100 smaller municipalities next year by acquiring existing dealerships, Chairman Lu Zhengyao said in an interview in Beijing Friday. It will initially sell cars that are part of its rental fleet and subsequently offer pre-owned vehicles from other providers as well as new cars, he said.

"Demand for used cars will mainly come from the smaller cities in China where the business is still fragmented. It's like we are expanding into some uncultivated land," said Mr Lu. "We will make the best use of our rental cars as well as take advantage of our lower purchase costs." Car, founded in 2007, will target lower-income consumers in smaller cities rather than big cities where buyers prefer newer vehicles. Sales of pre-owned passenger vehicles in the country will climb sixfold from 2013 to 36 million units by 2023, according to estimates by the China Automobile Dealers Association.

The company will sell used cars that have run less than 100,000 kilometers and have been in use for less than three years, said Mr Lu. The vehicles will come with a two- year quality warranty, he said. Car also plans to start selling new vehicles leveraging its bargaining power with automakers, said Lu.

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Car-Booking Services Car, which started an Internet car-booking service in January, is targeting customers who spend at least 60 yuan (US$9.40) a trip. The company's vehicles on average run 300,000 trips each day, said Mr Lu. More than 70 per cent of the customers of such chauffeur-driven cars are iPhone users, he said, citing analysis of downloads of its apps.

The company set up a lab in Silicon Valley in April and employs about 80 people, Mr Lu said. Car's ride-hailing offering will focus on high-end customers and not on car pooling and low- end services.

China's transport ministry said on Saturday it's drafting rules for online car-hailing services to protect passenger safety by banning the use of private cars, according to a statement on its website. Car said its services are in line with the government guidance.

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