Not long after EZZY, China’s first car-sharing platform, went bankrupt last month, it seems that other car-sharing platforms in China are also struggling to find their way. Except for a small number of profit targets, the vast majority of players are losing money. The promising market of car sharing is not so easy to operate.
In addition, return to share the bicycle market, in addition to the worship and ofo: two players head still standing, everywhere for Shared cycling the investment policy, and the more capital to head the player’s head effect, has several small and all the players who had failed, Shared cycling has begun a new round of reshuffle. So is this cross-border cooperation between Mobike and auto companies to seek a “retreat”, what are the advantages, and what are the shortcomings?
Sharing car market downturn, difficult to explore the profit model into the industry forward problems
Compared with the development of foreign car sharing for nearly 20 years, the rise of domestic car sharing is only five or six years, but it has attracted a large number of players. According to incomplete statistics, currently there are more than 300 registered companies for car sharing in China, and more than 100 companies have actually started fleet operation. Looking at the numbers, the popularity of car sharing in China can be imagined. However, from the actual operation, the survival situation of shared cars in China does not seem to be very optimistic.
Just last month, EZZY, a domestic car-sharing brand, announced its dissolution. This car-sharing enterprise, which started online operation in Beijing in 2016 and owns BMW and Audi luxury car operating fleets, has come to the end of the road of exploring car-sharing in China in just over a year, which makes people sigh. In fact, EZZY’s demise is emblematic of the woes facing many of the country’s car-sharing companies.
First, the operation cost of car sharing is too high, which is a heavy asset business. Compared with the low cost of shared bikes, a shared car can cost tens of thousands of yuan or even more. However, no matter leasing or full payment is adopted, high cost input is needed. The upfront cost alone is enough to make many platforms difficult to support, let alone the later operation cost. EZZY is an obvious example.
EZZY was severely understocked, with fewer than a hundred vehicles operating in the Beijing area before its closure. In fact, scale is the inevitable outcome if profitability targets are to be met. In addition, it is difficult to schedule vehicles in the mid-term, which aggravates the imbalance between supply and demand. Some potential users who have already registered with EZZY have no choice but to uninstall the software and switch to other platforms.
Second, the balance between business interests and user experience is difficult to achieve, and to some extent the two may conflict. To some extent, business interests and user experience can complement each other, but there are also situations where they differ. In fact, EZZY, with its focus on user experience, is a bit of a conscience. To improve the user experience, the platform takes care of services such as remote window closing and door locking, which are so subtle that users can only focus on one thing, driving, while the platform takes care of the rest.
In addition, EZZY operates on a “lend and return” basis instead of the “lend and return” model of mainstream car sharing platforms, and the platform reimburses the parking fee once the car is returned, greatly improving the user experience. However, it is precisely this series of “people friendly” services that make the platform need to pay more costs for operation and maintenance, and in the long run, enterprises will eventually be placed in an embarrassing situation of spending a lot of money but finding it difficult to recover costs.
In addition, many of China’s car-sharing platforms also face problems such as too few outlets and a lack of widespread charging piles. And a very “fatal” flaw is that shared cars can not be parked anywhere like shared bikes, and there is no charge for parking.
It seems that car-sharing, which has been touted by the industry, is actually a business that is hard to achieve its profit targets. The scale is difficult to expand, the pressure of capital, the competition pressure of homogenization of the industry, are suppressing the pace of sharing cars. It can be said that the domestic car sharing platform is in a semi-blank period. Although many players have entered the game, the overall operation situation is not very optimistic and the right profit model has not been found.
Therefore, while car-sharing has become a new trend in the industry, attracting players from all walks of life, the main problem facing these car-sharing platforms is that they can’t find a way to make money. The announcement of Mobike’s embrace of shared cars at the same time makes one ponder.
Advantages of Mobike entering car sharing: docking user resources, favored by capital
As we all know, Mobike, which has become popular in China with bike-sharing, and Ofo, another bike-sharing company, form the two biggest bike-sharing companies in China. Mobike and Ofo accounted for nearly 90 percent of the active users of Chinese bike-sharing brands in 2017, according to the 2017 Summer China Bike-sharing Market Research report released by IMedia Consulting.
Therefore, although Mobike has defeated many niche players in China on the road of bike-sharing, there is a ceiling for its share growth in the sharing market space. In addition, in just one or two years, many shared bikes in China have died or faced business problems, such as Wukong bike, Kuqi Bike and Bluegogo, which preceded Mobike and Ofo. In front of this unknown fork in the road, the bike-sharing industry showed its rapid rise of vitality, but also quickly exposed its difficult to maintain the inferiority state of survival.
Therefore, mobike’s embrace of shared cars at this time makes one wonder whether it is trying to break new ground by taking advantage of the wave of shared cars.
From another perspective, Mobike has certain advantages in the shared car industry by virtue of its rich experience in the bike-sharing industry and other factors.
First, the existing user base and market share provide support. Mobike, one of the leading bike-sharing companies in China, also has 150 million users. Had the large scale of users support, certainly can make into Shared auto mo worship with user size advantage, can take the user from the Shared cycling short-distance travel, directly on the received a share in the long-distance travel of the car, not only solve the user, the purpose of long-distance travel can also seamless docking user “the last kilometer” of travel demand. So it’s no surprise that Mobike, riding on the popularity it has gained in the bike-sharing sector, is working across the board.
Second, mobike’s advantage as one of the biggest players in the domestic bike-sharing industry makes it more attractive to capital. It is obvious to all that the more you stand in the front of the industry, the easier it is to attract the attention of capital. Previously, Mobike has received financing from Tencent and other enterprises, indicating that its industry prospects are promising. Moreover, the cooperation between Mobike and Guizhou Xinte Electric Automobile can undoubtedly reduce the capital investment and reduce the burden of car purchase by virtue of the vehicle resource advantage of automobile enterprises.
From this point of view, Mobike’s entry into the car-sharing industry is endowed with unique advantages in terms of capital and resource connection. Although it is not entirely certain of its intention to stay together, it is certain that Mobike’s focus in the short term is still in the field of shared bikes, and the vigorous expansion of shared cars may take some time to temper.
Many challenges, the future depends on the operation model
As mentioned above, although car-sharing industry has a promising prospect and higher profits, few enterprises have found a suitable profit model so far. Therefore, mobike’s entry into the market at this time is undoubtedly a big bet in the field of shared cars, and this big bet can’t be broken.
Undeniably, Mobike’s entry into car-sharing is not only faced with some common problems in the car-sharing industry, but also with many problems in the car-sharing industry itself.
Different from the leading advantage in bike-sharing, Mobike will undoubtedly face more players, especially some traditional automobile companies, which are more experienced in operating cars and have advantages in vehicle resources. Even if Mobike achieves crossover cooperation, it will face greater competition in operating shared cars, not only in exploring its own profit model, but also in facing pressure from strong competitors. In addition, although car sharing and online car hailing are two different industries with different operation modes, to some extent, in addition to facing competition from peers, the current hot online car hailing will actually have a big impact on shared cars.
From this point of view, there is no doubt that the cross-border cooperation between Mobike and car sharing will be relatively difficult. I believe that the market will give the answer to what direction it will evolve in the future. However, even though it is difficult to explore the profit model and many players, the car-sharing industry is the same as the bike-sharing industry. The one who can gain the favor of capital and users by virtue of the advantages of its operation model will be the ultimate winner. In the future competition in the car-sharing industry, the players who will ultimately stand high are those who can not only think for the user, but also ensure that the enterprise can continue to move forward.
In general, Mobike’s entry into the field of shared cars is a big attempt to expand its business. Time will tell us whether it is crossover or transformation due to the shrinking of bike business.
Liu Kuang, meditation on the Internet, wechat official account: Liukuang110