China is by far the world’s largest car market, with ownership reaching more than 170 million.

Rapid growth is boosting the global auto industry, but presents new challenges for policymakers over congestion and environmental sustainability.

China’s government is now encouraging the expansion of car sharing.

CGTN’s Daniel Ryntjes reports.
Follow Daniel Ryntjes on Twitter @danielryntjes

The traditional equation: Growing population plus growing wealth equals greater car ownership. But city planners are encouraging models that maintain the benefits of mobility by sharing rather than owning.

“One big problem here in China, especially urban areas, is traffic congestion. Car sharing has the potential of reducing traffic congestion by increasing the utilization of the existing car park. So I think that could make a huge difference for the average Chinese urban resident,”IHS Markit analyst James Chao said.

Data backs that up. A University of California study involving 9,500 members of the rideshare service car2Go in North America concluded that each shared vehicle removes between seven and 11 private vehicles from city roads.

Just a week ago, the Chinese government released new guidelines to support the development of car sharing, such as encouraging designated parking spaces in convenient locations for homes, shopping, restaurants and workplaces.

“So I think you’ll see more automakers experimenting with car sharing, not necessarily finding the right business model today or even tomorrow, but I think all automakers recognize this as a risk to their essential business model, and therefore want to participate in the development of this new model,” Chao said.

The guidelines also encourage standardization, ensuring the safety of vehicles, the protection of private data and the use of credit records as an alternative to paying a deposit.

As more people make the leap from car ownership to the shared model, they will also be jumping into vehicles powered increasingly by efficient battery technologies. The Chinese government is also encouraging the roll out of plug-in points so that these work-horses of the future can recharge as they wait for their next customer.

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Arun Sundararajan talks about China’s ride sharing industry

CGTN’s Elaine Reyes spoke with Professor Arun Sundararajan of NYU’s Stern School of Business about China’s ride-sharing industry.