Government issues list of vehicle rental options as part of reform

The central government has released a list of vehicle rental companies that its departments may use, a step forward in the reform to control government spending on vehicles - an effort that analysts said will boost the domestic rental market in the future.

According to the guideline issued on July 16, government vehicles for regular affairs should be scrapped, leaving a small number - around 10 percent - for special functions. Under the guideline, departments should use the vehicle rental companies when cars are needed.

Additionally, officials from central departments can receive monthly traffic subsidies ranging from 500 yuan ($81) to 1,300 yuan, depending on their rank.

Central government departments are required to complete the vehicle reform by the end of this year, while the reform by local governments will be finished next year. Other public sector bodies such as State-owned companies must complete the reform within two to three years under the guideline.

The new list names 33 companies that will be allowed to provide rental services in Beijing, and nine others that can provide rental vehicles outside of Beijing. For chartered vehicle service, nine companies are listed as options.

"It's a big step to push forward the ongoing reform on government vehicles to control large spending," said Yan Jirong, a professor at Peking University's School of Government.

Last year, spending on vehicles by 38 central government bodies and 389 affiliated institutions reached about 4.2 billion yuan, the National Audit Office said.

Analysts estimate that there are more than 2 million government cars in service across the country, so after the scrapping of government vehicles, there will be a huge demand for rental vehicles.

For example, large official events require cars to transport participants from hotels to conference buildings and to other places, "which will boost the rental service greatly," said a Beijing-based analyst from the rental vehicle association who requested anonymity.

On the promising future for rental service, Zang Zhongtang, vice-president of CAR Inc, a candidate company on the list, agreed with the analyst. Zang said the company has decided to build a special team to deal with the emerging business from the government.

"There will be competition among rental companies for potential business, which will depend on the service and network in the country," he said, adding that his company's well-established network of stores can make the rental service smooth in different cities. That should be an advantage when government departments are choosing a service, Zang added.

Like Zang, Shao Wei from eHi Car Service, another candidate on the list, said his company will establish a new department to attract offers from the government.