Lenovo Holdings confirmed on the 8th that it has invested in China Car Rental, becoming the strategic shareholder of the country's largest car rental company.
Through this round of financing, Shenzhou Car Rental has obtained at least one billion yuan of investment, including equity and debt. Lenovo Holdings' share in Shenzhou Car Rental Company will exceed 50%. More details of the cooperation between the two parties will be announced in late August.
Inject huge sums of money to run away
It is reported that after the completion of this round of investment, the cost of China's car rental interest rate will drop from the current industry average level (more than 12%) to about 5% to 6%, which is the same as the level of developed countries' financial leasing interest rates.
Founded in 2007, Shenzhou Car Rental is China's largest nationwide chain car rental company. It currently has approximately 4,000 vehicles available for rent and operates in more than 30 cities across the country.
Lu Zhengyao, CEO of Shenzhou Car Rental, said that he plans to expand the fleet size to 10,000 vehicles in the next two or three months. Such a large purchase volume will greatly reduce the purchase cost, and the scale benefits that will follow when the vehicle is in place will be considerable.
It is reported that car rental in China has significantly reduced the rental price of all models, with a decrease of 30% to 50%, which is intended to stimulate potential consumer demand in the market.
In response to the capital injection by Lenovo Holdings, Liu Erhai, Managing Director of Lenovo Investment and Director of China Car Rental, said that the car rental industry is a capital-intensive industry, while domestic auto finance and auto credit have just started. For the car rental industry, the cost of equity financing is extremely high High, which greatly restricts the development of car rental companies.
This time, Lenovo Holdings turned its attention to the car rental industry, on the one hand because of its strong financing capabilities that other investment banks such as PE and VC did not possess; More and more perfect, the industry turning point has arrived. "Liu Erhai said.
Liu Erhai believes that the current status of the domestic car rental industry is that the company's equity is diluted and the scale is too small. The industry's first financing amount is more than 20 million to 30 million US dollars, and there is no absolute boss in the industry. This time, Lenovo Holdings invested heavily in order to enlarge the car rental in China.
"Lack of funds is a key factor restricting the development of the domestic car rental industry." Lu Zhengyao once said.
At present, domestic car rental companies generally lack operating funds, but this market has great potential. According to a survey, the proportion of consumers who have rented a car in 2009 has increased by 14.2% compared with 2006. The survey also shows that consumers are still very sensitive to prices, and most people still prefer to choose economic models with a daily rent of less than 200 yuan. .
"Card position" stage
In fact, compared with mature countries, China's car rental industry is not so “sunriseâ€. In the United States, more than 5 million vehicles are used for car rental, and the number of vehicles available for rental is increasing at an average annual rate of 8%. The scale of car rental in Japan is increasing by 20% every year.
According to statistics from relevant departments, there are currently about 3,000 companies engaged in car rental services nationwide, of which only 20 companies have more than 300 rental vehicles. The total number of leased vehicles is only about 40,000.
At present, companies such as Supreme, Shenzhou, Yihe, etc., which are gradually forming scales in the domestic car rental industry, are still in the stage of horse racing. All three companies rely on the successful introduction of venture capital to obtain financial support for the next step in development.
This is related to the poor correlation between the domestic car rental industry and the vehicle manufacturing industry. Internationally, car rental has increasingly become an important part of the automotive industry chain. 20% to 30% of new automotive products enter the car rental market directly after leaving the factory.
The operating vehicles of foreign car rental giants are often new vehicles provided by automakers. After 8 months to one year of use, these vehicles will be recycled and sold into the automaker ’s used car dealership channels.
In China, factors such as unstable prices in the automobile market have caused vehicle manufacturers not to intervene in the field of large-scale car leasing. Car rental companies have great difficulty in obtaining large amounts of financial support through banks and insurance companies. Therefore, most car rental companies basically rely on their own funds to barely complete the large-scale investment in the early stage.
Therefore, whoever takes the lead in breaking through the funding bottleneck in domestic enterprises will have an advantage, quickly widen the gap with competitors, and constitute a higher barrier to entry in the industry, and have the opportunity to become an industry leader.
Seeking opportunities in the capital market by going public has become another goal in front of companies such as Supreme, China, and Yihe. It is reported that in addition to car rental in China, there are no fewer than five car rental companies that have publicly announced their intention to go public.
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