Chinese Car Rental Company Plans Major Expansion

A Chinese rental car company is planning an initial public offering in 2011 to fund expansion in the fast-growing but fragmented domestic car rental market, the company’s chairman says in a Reuters article. Chairman Ray Zhang said on Monday that his eHi Car Rental Co Ltd, backed by various venture capital firms, recently raised $20 million from investors. eHi plans to use the proceeds to help expand its fleet to 10,000 cars in three years from about 1,000. EHi provides self-drive and chauffeur-drive services.

Zhang, who founded eHi in 2006, said that China has the potential to become the world’s biggest car rental market, “where the world's biggest car rental company could be born.”

Two thirds of the 300 million people in the U.S. own cars, space shortages and pollution in China create car rental demand. About 200 million Chinese hold driver’s licenses, and that number is growing by 20 percent per year, he said.

“Car rentals in the United States is a sunset business, but in China, it's a sunrise one,” said Zhang.

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