China’s first car-sharing scheme starts in Hangzhou

China’s first commercial car-sharing scheme is up and running in Hangzhou, east China

After two years of trials, the city of Hangzhou has announced the launch of its car-sharing scheme, according to the Zhejiang Daily.

Car-sharing schemes allow a number of people to use a single car, but not to own it. They gain the benefit of using a private car, but without the costs and responsibilities of ownership. The use of such schemes in cities around the world has been found to reduce, or at least, delay car ownership.

Hangzhou is already known for being the first Chinese city to operate a public bicycle scheme. That scheme was government-backed, but the car-sharing scheme is purely commercial.

One of the companies involved in the scheme said that with no shops or on-site staff, and car rentals and returns all handled online, the company would have much lower costs than normal rental firms. The biggest expense would be vehicle purchases. More than 4,000 people have already signed up as members, according to reports, with expectations of 40,000 by the end of the year.

A survey of scheme members found that of 500 respondents, one-tenth had opted to not buy a second car after joining, and one third gave up or delayed plans to buy a car.

There are also plans to experiment with allowing the rental of private vehicles – car owners can hand over cars they are not using, and the car-sharing company would then rent it out. The owner would receive an annual payment for depreciation, a share of the rental income and a quantity of free rental time.

Car-sharing schemes are believed to have originated in Switzerland in the 1940s as locals organized car cooperatives, with drivers handing car keys onto the next user when they had finished. It was in the 1970s that the schemes really took off in Europe. Today, the Dutch capital Amsterdam has 310 parking locations for shared cars.

China’s car rental industry got started in 1991, according to the China Economic Weekly, but due to a lack of legislation, poor credit rating systems and the small size of companies it has only recently begun to expand, with around 10,000 car rental agencies in operation as of 2010.

In 2011, the Ministry of Transport issued a circular on promoting the development of the sector, with instructions for the management and business models of car rental agencies, and urging local governments to improve legislation in order to promote growth. 

Fong On Kei is an intern at chinadialogue’s Beijing office