Taxies wait for passengers at the Qingdao railway station on Oct 7. (Photo by Huang Jiexian/For China Daily)
Online chauffeured car hailing platforms' development may slow down in the tough days ahead, as major Chinese cities squeeze out the popular compact vehicles from business.
Mid-size or bigger car models are required for the burgeoning businesses in Beijing, Shanghai, Guangzhou and Shenzhen, according to the regulation drafts released on Oct 8 for soliciting public opinions.
Regulations of Beijing, Shanghai and Shenzhen state the vehicle must have a wheelbase longer than 2.7 meters for petrol cars, or 2.65 meters for new energy vehicles, while Guangzhou's terms demand a 4.6-meterlong car body.
Industrial experts say the rapidly-developed online chauffeured car hailing businesses are facing a sudden stop, and platform companies need to shift toward heavier assets, and incur higher costs.
Yale Zhang, managing director of Automotive Foresight (Shanghai) Co Ltd, predicted that some of the platform companies might go bankrupt in the near future, as the carsharing businesses' development would not meet their projections when the larger, more expensive car models are required.
He told China Daily: "These companies burned such a large amount of money to attract users, believing the situation to be transitional, but they might not sustain long enough to see their age."
They were expecting another 10 years of speedy development, hoping that fully autonomous, driving vehicles would eventually boost the car sharing further, allowing them to dominate the future mobility solution markets, Zhang said.
"Now, their ongoing plans are driving into a dead end. As long as the cars go bigger, the price will climb, and the users will decrease. The platform companies might not make as much profit as expected," he added.
The Beijing Municipal Commission of Transportation claimed both hailed cars and taxies are operating with much less efficiency than public transport. The city is hoping to increase development of public transport rather than the more labor-intensive individual transportation sector.
Zheng Yun, executive director of the automotive practice at Roland Berger S trategy Consultants, also sees an end to the online platforms' speedy growth.
He said: "When the policies force the individuals' compact and economy cars out, the companies will have no way to attract drivers to join the platform with their individual cars."
