China's auto rental sector-a market seen as one with great potential and risks-has recently attracted considerable interest from foreign investors: Mitsubishi Corp, Japan's largest trading company signed November 18 an agreement to invest $20 million in a joint venture car rental firm with Zhejiang Cheeyo Auto Rental.

Prior to this, a consortium headed by Goldman Sachs Group Inc. injected $70 million into Shanghai-based eHi Car Rental Ltd; Legend Holdings injected 1.2 billion yuan in cash in China Auto Rental to acquire more than 50% stake in the car rental service provider.

China's auto rental sector is growing very fast and has good potential to develop further. While the auto rental market in the U.S. is already quite mature-the rental vehicles consist of 55% of the country's entire auto industry, said Yorihiko Kojima, Mitsubishi Corporation President and CEO.

China's car rental market used to be unanimously favored by industrial insiders, and experts were predicting that by 2015, the demand would reach 300,000-400,000 units, and the operating turnover would top 18 billion yuan.

Nevertheless, due to the lack of a credit rating system and risk prevention mechanism, there are hurdles for potential demand being converted into real demand in the market, which, on the one hand, is still in an initial stage of development and on the other hand, the operation mode of car rental enterprises is being questioned.

As Avis, Hertz and other international well-known car rental companies enter the world's biggest auto market, China's domestic car industry is also acting actively in transformation and innovation, which Zhang Xiaolin, chairman of Zhejiang Cheeyo Auto Rental, said means a new, competitive era has come and who can survive is mainly subjective to its operational and management levels.