The car rental industry went to the United States for market listing.

A news about the IPO of China Shenzhou Car Rental further revealed the battle between the two giants of the Chinese car rental industry.

It is said that Shenzhou Cars has the potential to become the “first share” of domestic car rental service companies listed in the United States. China Car Rental submitted an IPO application to the United States Securities and Exchange Commission, which was also the first Chinese company to apply for a listing in the United States in 2012. The China Car Rental Program is listed on the New York Stock Exchange with a raised capital of approximately US$300 million.

Does Shenzhou Car Rental realize its dream?

In 2011, once a car rental company (Weibo) vowed to launch a listing plan, it was also listed in the United States. However, I did not expect a "3·15" to disrupt the listing of rental cars. Controversy over illegal driving of the driver has caused investors to have some confusion about a car rental. After a wave of waves, the lawyers also participated in the courtroom with a rental car. In the industry's view, all this goes against a car rental listing, which is done by competitors. It aims to prevent the listing of a rental car and pave the way for its own listing. It also aims to prevent a car rental fund from becoming big.

One of the biggest competitors in the industry is Car Rental!

Will China's car rental be the first one?

Can China Car Rental be the first company in the domestic car rental industry? Why did he go so hot in 2012?

Whether the dream of a car rental in China can come true. It depends on two points. First, what strategies do competitors use? If the reenactment prevents a car rental scene and seizes the weakness of China Car Rental, it will certainly have a negative impact on the listing of China Car Rental. Second, has the US’s attitude toward Chinese-funded concept stocks really changed, from the short-sighted conception of Chinese stocks to the calm and objective treatment?

From the second point of view, there are indeed such signs. Recently, a set of data has been spotted, and the stock price of Chinese companies listed in the United States has risen rapidly. According to statistics, Dangdang.com has risen 62.7% in the top 10 Chinese stocks that have performed the best in US stock exchanges. AsiaInfo - Lianchuang's share price has risen 52.9% since the beginning of this year; Wuxi Suntech's share price has risen 43.4% this year; VanceInfo has risen 43.3%; Easyhome has risen 42.9%; Henan Zhongpin Food Co., Ltd. rose 39.1%; Youku Net rose 38.9%; Yan Hui Sunshine rose 37.3%; SouFun rose 36.4%; Net Qin rose 31.9%. Despite the fact that many companies have not returned to high levels compared with the decline in the stock prices of these companies in 2011, such rapid and large-scale increase at least indicates a significant change in the attitude of investors – from blindly watching the empty Chinese concept stocks to rational treatment.

Why does the China Shenzhou Car Rental Co., Ltd. have an urgent rush to market? In my opinion, there are two points.

First, the funds are in an emergency.

As we all know, the car rental industry is a burning industry. The automobile leasing industry is not a light asset industry. It is an industry with large investment in fixed assets and a short depreciation cycle. Its biggest expense is the purchase of a car, and the price of a car is more than 100,000 yuan. If a certain scale is formed, the purchase price of the car is quite amazing.

Because of this, although Shenzhou Car has a large consortium behind it, it has large investments and losses. In September 2010, Lenovo Holdings injected RMB 1.2 billion through “equity + creditor” approach, successfully controlled China’s car rental, and brought in several billion yuan of bank credit. However, the huge amount of funds was immediately "burned". Some of them were used in the staking and renting of Shenzhou Rent-a-Car. He purchased Huadong Leasing and Beichen Leasing; another part was used to invest in car purchases. In 2010, Shenzhou Car Rental Co., Ltd. invested 600 million yuan to purchase 6,000 cars at a time. In 2011, it invested 3 billion yuan to purchase 25,000 vehicles. In addition to refreshing the purchasing records of the car rental industry, China Car Rental Co., Ltd. is also known for its amazing ability to burn money.

The money burned and the loss came. Since 2009, China Car Rental Co., Ltd. has not been profitable. The loss in 2010 was as high as 43.33 million yuan. In the first three quarters of 2011, the loss reached 117 million yuan, a year-on-year increase of 443.7%. (In fact, if you only talk about operating income, its growth is still quite good. However, under the high growth rate of rental depreciation, direct operating expenses, and marketing expenses, etc., the extensive operation of Shenzhou Car Rental cannot escape the predicament.)

China’s car rental companies have to face such a cycle—the more they develop, the more they lose money; the more they lose money, the more they need money.

Second, quickly increase market share and weaken competitors.

China Car Rental has too many large and small competitors in China. However, in the eyes of most people, its biggest opponent is still a car rental. Two different business models, two ambitious car rental giants, are competing in two markets - the car rental market and the capital market.

In accordance with traditional business rules, in an industry that does not require much technological innovation, the top three market share usually has the leading advantage, and latecomers will spend a lot of effort to surpass. The reason why Shenzhou Rent-a-Car Co., Ltd. has taken over and purchased vehicles arbitrarily, on the one hand, it sees high growth in market demand, on the other hand, it also hopes to continuously increase market share and brand awareness.

In the face of aggressive China’s car rental, how will other auto companies respond? Once these leading car rental companies are listed, will the pattern of China's car rental industry change? What changes will happen?