It's no longer a daydream to get a free ride. The driver, wearing a suit, holds open the car door and carries luggage for you. It is thanks to the mass of coupons market players have been throwing around since day one of chauffeur-driven car-on-demand services in China. UCAR, a separately-operated brand under the country's leading auto rental provider CAR Inc, is the latest contender in the "cash burning" match, as the company launched its chauffeured car services in January with an intended subsidy scale of at least 2.5 billion yuan. Having only emerged since last year as an extension of taxi hailing, chauffeur-driven car-on-demand services have gained immediate popularity. New forms of Internet-based spending, including online-to-offline (O2O) services will "come to thrive", said Chinese Premier Li Keqiang in his tone-setting speech for the country’s economic development this year at the National People's Congress. Positioned as an entry point for transportation other than a traditional auto rental provider, CAR plans to develop the chauffeured-car service as one of its main business and secure the highest daily bookings in three to six months. Here we present a question and answer interview with Charles Lu Zhengyao, chairman and CEO of CAR Inc, or Shenzhou Auto Rental, about his insights into the booming market. Q: What prompted the company to launch chauffeured car services under UCAR Shenzhou private car and join a crowded market with taxi-hailing applications? Lu: It is not a bad thing to let the bullet fly for a little while first. We want to thank our fellow competitors for cultivating the market, so customers won't be asking what the service is. Their only question is our differences. The company also considered the regulatory direction. We are not late entering this race and now we are, it's not a small play. We have hired more than 10,000 drivers since the launch of the new business. Our drivers, different from others, are full-time employees offering a standardized service. They have to go through selection and training before starting work. I grade passes to our service in the 60 cities which now offer a chauffeured car service. It's only been a very short period of time, but the lowest score I have in mind to achieve is 90. Because of the fast pace, our app and back-office system will need some time to adjust. I'm confident that we will do better. We require cars to be in position five minutes after customers place orders. Our peers can hardly offer the same level of services. Cars can now be ready in 10 minutes, but I want it to be faster. That's where our strength lies, as we are supported by a whole analytic system. Q: How much does the UCAR plan subsidize its chauffeured car services? How will the subsidiary affect corporate earnings? Lu: We plan to draw 50 million new users. As the company is now offering each a 50-yuan coupon, this part's subsidy will amount to about 2.5 billion yuan. Besides, there's a promotion doubling a customer's balance for every hundred bucks they add into their accounts. After thorough market research and analysis, we are preparing to throw huge capital into the new business. The subsidy will continue to customers' heart's content. As the company owns the fleet, the cost is fixed and we don't need to subsidize unlicensed cab drivers. We give all subsidies to our clients. Winning them is crucial to trump the market. There hasn't been a profit timetable for the business segment. Q: How is the service UCAR offers different from that of Didi and Kuaidi? What makes the company confident it can become the frontrunner in the chauffeured car service business? Is the industry undergoing a reshuffle? Lu: We don't use the word "shuffle" as often as the media. I believe the competition hadn't really started before we entered. UCAR is not just another market player. The company will outpace competitors by daily orders in three to six months. It was not until half a year ago that the chauffeured car service took shape. The capacity is obvious. It's too early to say by whom the market is snapped up. I expect the industry to heat up in the coming months. The company is being conservative about the time span we need. UCAR will soon surpass Didi in chauffeured car services. We are different in our business model, personnel management and professional support. There's no private cars in UCAR's fleet. The company asks drivers to submit certificates of a non-criminal record and receive regular physical checkups as well as safety training. They have a fixed salary with social welfare included. Each passenger is entitled to an insurance claim of as much as 1 million yuan. Q: How do you view the clampdown on private cars' participation in the taxi business? Lu: I believe it's normal for regulatory enforcers to supervise the market according to rules. As for whether such a phenomenon will change, it's up to the regulators' determination and enforcement efforts. We don't care about others, but focus on our own business. The more customers we can win over, the better. I'm not saying UCAR will get rid of other players overnight, but I believe our business volume will stand out.

Taking a commuter bus to work has always been the norm for white-collar workers. But now, a new startup in Shanghai has been working to provide more options for inter-city commuters. Xiaolong Bus is a comprehensive information service platform for smart transportation, applying professional IT data analysis and computing technology services. The use of big data analysis allows route planning to be more targeted, efficient and scientific. Passengers can follow the WeChat account of Xiaolong Bus and input their daily routes for work, which are sent to a database. The system will then intelligently carry out feasibility analysis, plan routes and stations, arrange vehicles and drivers and open lines according to users' needs. After the opening of the line, the system can collect and analyze realtime data, track the running state of each vehicle, and adjust the routes according to the requirements. Xiong Guanghui, CEO of Shanghai BravoFor Information Technology Co Ltd, the developer of Xiaolong Bus, said the Shanghai market has its own characteristics compared with other areas such as Shenzhen and Beijing. Shanghai's public bus and metro lines are well developed, which means it can generally meet the demands of local residents. Xiaolong Bus in Shanghai works to supplement the current transportation tools. It also means the routes' design must be more creative, Xiong said. Xiaolong Bus came into operation in May 2015 and has now opened 72 lines, which mainly connect communities and work locations. The occupancy of the most popular lines exceeds 80 percent. It usually takes about one to two months for a new line to become popular, according to Xiong. Xiaolong buses have been running in business areas such as Zhangjiang, Caohejing, Jinqiao, Lujiazui, Minhang and Wujiaochang. The Xiaolong Bus has become increasingly popular among white collar workers and has recently gained a large number of users. So far, Xiaolong Bus has established strategic partnerships with a number of qualified bus providers. About 80 percent of vehicles are green buses. The Xiaolong Bus also provides management systems concerning suppliers, passengers and vehicle scheduling to better understand and monitor the dynamics of the shuttle bus operators with comprehensive operation reports. As an integrated information service platform for smart transportation, Xiaolong Bus has been actively working to dig out more shuttle bus markets, such as services for hotels, universities, communities, tourism sites and conferences. The internet-based bus sharing platform is expected to see a golden era of growth as major Chinese cities consider issuing new policies to regulate online chauffeured car-hailing platforms, industry insiders said. According to regulation drafts released in Beijing, Shanghai and Shenzhen last month for soliciting public opinions, vehicles must have a wheelbase longer than 2.7 meters for petrol cars, or 2.65 meters for new energy vehicles. The rapid development of online chauffeured car hailing businesses will slow down in the coming years, industrial insiders said. At the same time, the internet-based bus sharing platform market has surged ahead, and a number of developers have been working to accommodate a growing user base.

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." Industrial data showed that only 2.4 percent of the Didi Chuxing drivers in Shanghai would met the requirements. The platforms will have to purchase more mid-size cars to fill the void, so the light-asset platform operators will head toward heavier assets, said Zheng. A lawyer at Junhe Law Firm said that the government has been supporting the heavy assets model from the very beginning, as policy makers must have considered the social impact and passengers' safety, rather than help increase the sector's business. The lawyer expected a heavy-asset online platform to receive full legitimacy for the company, its fleets and drivers. Shenzhou Zhuanche operates its business by renting vehicles from its heavy asset affiliate Car Inc, China's largest car rental company by fleet scale. Shenzhou Zhuanche said the new regulations won't influence its operation, as the business model has always been focused on the passenger safety, which is in line with the governments' philosophy. Yidao Inc said it will follow the government's regulation, making sure to meet every requirement and get certified with the fleets and drivers accordingly. Didi Chuxing, China's largest online car hailing platform by volume, said the operation costs would climb, and the users' payments increase to more than double standard taxi fare, according to the company's announcement. Didi Chuxing also called on local governments to nurture a favorable environment for the emerging car sharing business. President of the Beijing Transportation Research Center Guo Jifu said Beijing's priority is to improve public transportation, and that the taxi and online car hailing businesses need moderate development. The cities are aiming to differentiate the chauffeured car hailing from traditional taxies, not only in vehicle size, but also in service and price, local media cited Chen Yanyan, deputy dean of the traffic school at Beijing University of Technology, as saying. Chen said online chauffeured car hailing is considered more of a luxury than the cruising taxies, and provides more premium services.