Tmall.com drives into car rental business

Tmall.com, China's leading online retailer, recently entered the car rental business.

Small auto rental firms are offering more than 300 models from various car makers, including Audi, BMW, Buick, Mercedes-Benz and Passat, on Tmall.com, a subsidiary of Alibaba Group. The cheapest rental is Volkswagon's Jetta at 120 yuan per day. The highest is a 49-seat city bus for 1,700 yuan a day.

Roland Berger, the largest strategic consulting firm in Europe, said China's car rental market had huge potential due to demand and limits on car ownership. The Beijing municipal government enacted such limits in December, 2010.

Roland Berger predicted that 10 to 20 franchised car rental companies with branches nationwide would emerge within three years, and the market would be worth 38 billion yuan in 2014.

The top three car rental companies by market share are China Auto Rental Inc., eHi Auto Services Co. and Top1 Auto Rental Co.

The car rental business in China is marked by low profitability. Smaller car rental firms hope to use Tmall's online platform to catch up with bigger firms. Tmall is seeking to expand its sales scope amid growing competition.

In 2010, Tmall started selling vehicles online. Geely Holding Group, an auto maker in Hangzhou, has sold 550 cars from one popular line since then.