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TABLE OF CONTENTS
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

As filed with the Securities and Exchange Commission on November 13, 2014

Registration No. 333-199150

 

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



AMENDMENT No. 4
TO
FORM F-1

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933



eHi Car Services Limited
(Exact name of Registrant as Specified in Its Charter)

Not Applicable
(Translation of Registrant's Name into English)

Cayman Islands
(State or Other Jurisdiction of
Incorporation or Organization)

  7510
(Primary Standard Industrial
Classification Code Number)
  Not Applicable
(I.R.S. Employer
Identification Number)

Unit 12/F, Building No. 5, Guosheng Center
388 Daduhe Road, Shanghai, 200062
People's Republic of China
(8621) 6468-7000

(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)

Law Debenture Corporate Services Inc.
400 Madison Avenue, 4th Floor
New York, New York 10017
(212) 750-6474

(Name, address, including zip code, and telephone number, including area code, of agent for service)



Copies to:
Portia Ku
Ke Geng
O'Melveny & Myers LLP
37/F Plaza 66, 1266 Nanjing Road W
Shanghai, 200040
People's Republic of China
(8621) 2307-7000
  Alan Seem
Shuang Zhao
Shearman & Sterling LLP
c/o 12/F, Gloucester Tower, The Landmark
15 Queen's Road Central
Hong Kong
(852) 2978-8000



Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.    o

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earliest effective registration statement for the same offering.    o



CALCULATION OF REGISTRATION FEE

               
 
Title of each class of securities
to be registered

  Amount to be
registered(2)(3)

  Proposed maximum
offering price
per share(3)

  Proposed maximum
aggregate
offering price(2)(3)

  Amount of
registration fee

 

Class A common shares, par value US$0.001 per share(1)

  23,000,000   US$7.00   US$161,000,000   US$18,708(4)

 

(1)
American depositary shares issuable upon deposit of the Class A common shares registered will be registered under a separate registration statement on Form F-6 (Registration No.333-199819). Each American depositary share represents two Class A common shares.

(2)
Includes (i) Class A common shares represented by American depositary shares initially offered and sold outside the United States that may be resold from time to time in the United States either as part of their distribution or within 40 days after the later of the effective date of this registration statement and the date the shares are first bona fide offered to the public and (ii) Class A common shares represented by American depositary shares that may be purchased by the underwriters pursuant to an option to purchase additional Class A common shares represented by American depositary shares. These Class A common shares are not being registered for the purposes of sales outside of the United States.

(3)
Estimated solely for the purpose of determining the amount of registration fee in accordance with Rule 457(a) under the Securities Act of 1933, as amended.

(4)
Previously paid.



The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to such Section 8(a), may determine.

   


The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to Completion

Preliminary Prospectus Dated November 13, 2014

10,000,000 American Depositary Shares

GRAPHIC

eHi Car Services Limited

Representing 20,000,000 Class A Common Shares

This is an initial public offering of American depositary shares, or ADSs, of eHi Car Services Limited. We are offering 10,000,000 ADSs. Each ADS represents two Class A common shares, par value US$0.001 per share.

Prior to this offering, there has been no public market for our ADSs or our Class A common shares. We anticipate the initial public offering price per ADS will be between US$12.00 and US$14.00. We have applied to have the ADSs listed on the New York Stock Exchange, or the NYSE, under the symbol "EHIC."

We are an "emerging growth company" under applicable U.S. federal securities laws and are eligible for reduced public company reporting requirements.



Investing in our ADSs involves a high degree of risk. For a description of the risks that you should consider before buying the ADSs, see "Risk Factors" beginning on page 19.



 
  Per ADS   Total  

Initial public offering price

  US$            US$           

Underwriting discounts and commissions(1)

  US$            US$           

Proceeds, before expenses, to us

  US$            US$           


(1)
The underwriters will receive compensation in addition to the underwriting discount. See "Underwriting."



Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.



The underwriters have an option to purchase up to 1,500,000 additional ADSs from us, at the initial public offering price less underwriting discounts and commissions within 30 days from the date of this prospectus.

Our common shares will be divided into Class A common shares and Class B common shares immediately prior to the completion of this offering. Holders of Class A common shares and Class B common shares have the same rights except for voting and conversion rights. Each Class A common share is entitled to one vote, and each Class B common share is entitled to ten votes and is convertible into one Class A common share at any time. Class A common shares are not convertible into Class B common shares under any circumstances. Upon completion of this offering, our existing shareholders will own an aggregate of 86,045,911 Class B common shares and 1,538,461 Class A common shares, which will represent 77.0% of our total issued and outstanding shares and 97.1% of the then total voting power, assuming the initial public offering price will be US$13.00 per ADS, the mid-point of the estimated initial public offering price range shown herein.

The underwriters expect to deliver the ADSs against payment in U.S. dollars in New York, New York on or about                , 2014.



J.P. Morgan   Goldman Sachs (Asia) L.L.C.

The date of this prospectus is                        , 2014.


Table of Contents

GRAPHIC


Table of Contents


TABLE OF CONTENTS

 
   

Prospectus Summary

  1

Risk Factors

  19

Special Note Regarding Forward-Looking Statements

  59

Use of Proceeds

  60

Dividend Policy

  61

Capitalization

  62

Dilution

  64

Exchange Rate Information

  66

Enforceability of Civil Liabilities

  67

Our Corporate History and Structure

  69

Selected Consolidated Financial and Operating Data

  72

Management's Discussion and Analysis of Financial Condition and Results of Operations

  78

Industry

  112

Business

  126

Regulations

  145

Management

  159

Principal Shareholders

  171

Related Party Transactions

  175

Description of Share Capital

  182

Description of American Depositary Shares

  194

Shares Eligible for Future Sale

  207

Taxation

  210

Underwriting

  217

Expenses Relating to This Offering

  223

Legal Matters

  224

Experts

  225

Where You Can Find Additional Information

  226

Index to Financial Statements

  F-1



        You should rely only on the information contained in this prospectus or in any free writing prospectus filed with the Securities and Exchange Commission, or the SEC, in connection with this offering. We have not authorized anyone to provide you with information that is different from that contained in this prospectus or in any free writing prospectus. We are offering to sell, and seeking offers to buy, the ADSs only in jurisdictions where offers and sales are permitted. The information contained in this prospectus or in any free writing prospectus is accurate only as of its date, regardless of the time of delivery of this prospectus or of any sale of the ADSs.

        We have not taken any action to permit a public offering of the ADSs outside the United States or to permit the possession or distribution of this prospectus outside the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about and observe any restrictions relating to the offering of the ADSs and the distribution of this prospectus outside the United States.

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PROSPECTUS SUMMARY

        This summary highlights selected information contained in greater detail elsewhere in this prospectus. This summary may not contain all of the information that you should consider before investing in our ADSs. You should carefully read the entire prospectus, including "Risk Factors" and the financial statements and related notes appearing elsewhere in this prospectus, before making an investment decision. In addition, we commissioned Frost & Sullivan, a third-party market research firm, to prepare a report for the purpose of providing various industry and other information and illustrating our position in the car rental and car service industry in China. Information from the report prepared by Frost & Sullivan, or the Frost & Sullivan Report, appears in "Prospectus Summary," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Industry," "Business" and other sections of this prospectus. We have taken such care as we consider reasonable in the production and extraction of information from the Frost & Sullivan Report and other third-party sources.

Overview

        We are the No. 1 car services provider and No. 2 car rentals provider in China in terms of market share by revenues in 2013, according to Frost & Sullivan. The top three players in China's car rental and car service industry, including us, in aggregate accounted for 10.7% of the market share by revenues in 2013, according to Frost & Sullivan. We believe such high market fragmentation presents a strong potential for our future growth and industry consolidation.

        Since our establishment, we have focused on investing in our infrastructure and technology, which enables us to benefit from increasing economies of scale. We believe that our broad geographic coverage, efficient fleet management, leading brand name, complementing business model and innovative services differentiate ourselves from major competitors and build a solid foundation for our long-term success, as demonstrated by the following:

    As of June 30, 2014, we had the broadest geographical coverage among all car rentals and car services providers in China as measured by the number of cities in which services are provided directly, according to Frost & Sullivan. We operate all our 760 service locations in 90 cities across China directly to ensure consistent and high-quality services.

    From January 1, 2012 to June 30, 2014, our fleet size increased from 7,717 to 15,409, while we generally maintained a car rental fleet utilization rate of over 70% during the same period. According to Frost & Sullivan, we had the highest fleet utilization rate among the top five car rental companies in China in 2013.

    Our "eHi" brand is one of the most-recognized brands in China's car rental and car service industry, according to Frost & Sullivan. As of June 30, 2014, we had over 550,000 registered members and over 32,000 corporate clients that used our car rentals and car services, respectively.

    We provide one-stop comprehensive services to both individual customers and corporate clients. This business model, together with our leading positions in both China's car service market and car rental market, enables us to cross-sell to different target customers and capture complementary and evolving market opportunities.

    We utilize mobile and Internet platforms to provide online to offline, or O2O, mobility solutions. We believe we were the first car rental service provider in China to introduce dedicated mobile applications for our customers to make reservations. In the six months ended June 30, 2014, 52.8% and 30.0% of our car rental services were derived from reservations made through our website and mobile applications, respectively.

 

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        Our one-stop comprehensive services include the following:

    Car rentals.  We provide self-drive car rental services to both individual customers and corporate clients to meet their travel, leisure, business and ground transportation needs. Our short-term car rentals have a term of less than one year and are primarily provided to individual customers on a daily, weekly or monthly basis. Our long-term car rentals have a term of one year or longer and are primarily provided to corporate clients. As of June 30, 2014, our car rental fleet included 14,260 vehicles of over 200 models primarily from major automobile manufacturers. In 2013, we derived approximately 66.6% of our net revenues from car rentals.

    Car services.  We provide chauffeured car services primarily to corporate clients, which consist of corporations of all sizes and government agencies. Our corporate clients include a majority of Fortune 500 companies in China. Our car services include routine services such as airport pickup and drop-off, inter-office transfers and other business transportation needs, as well as event-driven activities such as conventions, promotional tours and special events. We generally enter into long-term framework agreements with our corporate clients pursuant to which our vehicles and chauffeur services are provided by different subsidiaries under separate contracts. With over 1,000 vehicles and drivers as of June 30, 2014, our car services were offered in 57 major cities across China with a focus on first-tier cities including Beijing, Shanghai, Guangzhou and Shenzhen. In 2013, we derived approximately 33.4% of our net revenues from car services.

        We are the exclusive strategic partner of Enterprise in China. As the largest car rental company in the world with around 1.4 million vehicles in operation, Enterprise shares its operational experience and industry expertise with us. We are also the designated and preferred business partner of Ctrip, a leading player in the online travel agency business and a well-known travel brand in China. Ctrip has integrated access to our online reservation system on its website since May 2012 and in its mobile applications since June 2014.

        Our total net revenues increased from RMB450.1 million in 2012 to RMB566.4 million (US$91.3 million) in 2013, representing a growth rate of 25.8%. Our total net revenues increased from RMB260.7 million for the six months ended June 30, 2013 to RMB384.5 million (US$62.0 million) for the six months ended June 30, 2014, representing a growth rate of 47.5%. We incurred net losses of RMB175.7 million, RMB152.2 million (US$24.5 million) and RMB20.7 million (US$3.3 million) in 2012, 2013 and the six months ended June 30, 2014, respectively. Our non-GAAP adjusted EBITDA, defined as net income or loss before depreciation and amortization, share-based compensation, interest expenses, interest income and provision for income taxes, was RMB68.9 million, RMB102.1 million (US$16.5 million) and RMB133.0 million (US$21.4 million) in 2012 and 2013 and the six months ended June 30, 2014, respectively. For a reconciliation of our non-GAAP adjusted EBITDA to net loss, the nearest U.S. GAAP measure, see "—Summary Consolidated Financial and Operating Data—Non-GAAP financial measure."

Our industry

        China's car rental and car service industry is still at an early stage of development and has experienced rapid growth in recent years.

        Car rental market. Car rentals refer to rental of a vehicle driven by the customer for a specified period of time. The car rental market primarily consists of two types of service offerings: (i) short-term car rentals, which have a term of less than one year and are primarily targeting individual customers, and (ii) long-term car rentals, which have a term of one year or longer and are primarily targeting corporate clients. According to Frost & Sullivan, China's car rental market as measured by revenues grew from RMB9.4 billion in 2009 to RMB26.7 billion in 2013, representing a compounded annual growth rate, or CAGR, of 29.8%, and is projected to grow to RMB51.0 billion by 2017, representing a projected CAGR of 17.6% from 2013 to 2017.

 

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        Car service market. Car services refer to rental of a vehicle accompanied by a driver for a specified period of time, which primarily target corporate clients. According to Frost & Sullivan, China's car service market as measured by revenues grew from RMB1.3 billion in 2009 to RMB3.0 billion in 2013, representing a CAGR of 23.3%, and is projected to grow to RMB5.2 billion by 2017, representing a projected CAGR of 14.8% from 2013 to 2017.

        China's car rental and car service industry today is characterized by relatively low penetration rate and high level of market fragmentation. According to Frost & Sullivan, in 2013, the car rental and car service penetration rate in China was 0.4% in 2013, which was significantly lower than that in the United States (1.7%), Japan (2.6%) and Korea (2.5%). Car rental and car service penetration rate is calculated by dividing the aggregate number of rental and service vehicles by the aggregate number of passenger vehicles in the relevant country or region. In addition, in 2013, the top three players in China's car rental and car service industry, including us, in aggregate accounted for 10.7% of the market share as measured by revenues, while the market share of the top three players reached 95.4% in the United States, 32.4% in Japan and 48.1% in Korea, respectively, according to Frost & Sullivan. We believe the relatively low penetration rate and high market fragmentation in China indicate a strong potential for future growth and consolidation in China's car rental and car service industry.

        Competition in the car rental and car service industry is primarily based on, among other things, brand recognition, network coverage, rental price, quality and convenience of services, ability to provide tailored services, operating efficiency and variety of service offerings.

        Driven by the continued growth of economy and increasing car usage for travel, leisure, business and ground transportation needs, the market demand for car rentals and car services is expected to maintain a stable growth from 2014 to 2017.

Our competitive strengths

        We believe that the following competitive strengths have contributed to our rapid growth and our market-leading position:

    leadership in China's fast growing car rentals and car services industry with one-stop comprehensive service offerings;

    innovation and technology driving business excellence;

    efficient fleet management;

    strong brand recognition focusing on customer experience;

    strategic partnerships with leading global travel service providers; and

    experienced management team.

Our strategies

        Our mission is to provide comprehensive mobility solutions as an alternative to car ownership by best utilizing existing resources and sharing economy to create optimal value. We are pursuing the following strategies to achieve this mission:

    continue to leverage the strengths of our one-stop comprehensive services business model to capture opportunities in the continually evolving markets;

    further increase network penetration in existing markets and expand geographically in selected markets;

    retain and grow our customer base and attract more premium customers through targeted marketing as well as tailored service offerings; and

 

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    continue to identify strategic partnership opportunities.

Our challenges

        Our ability to achieve our goal and execute our strategies is subject to risks and uncertainties, including:

    our ability to achieve and sustain profitability;

    our heavy reliance on proprietary technology platform;

    our ability to compete successfully against current and future competitors;

    our ability to sustain our growth rates and manage our expansion plan;

    our ability to dispose used vehicles at desirable prices or timing or through appropriate channels;

    our ability to raise sufficient capital to fund and expand our operations at a reasonable cost;

    various government policies on automobile control and purchase restrictions in certain Chinese cities;

    our ability to enhance our brand recogonition and maintain a high level of customer satisfaction;

    our ability to control the losses resulting from customer violation of traffic rules; and

    our ability to obtain all of the requisite permits, licenses or making all of the requisite filings or registrations or meeting other regulatory requirements for operating car rentals and car services business in China.

        Please see "Risk Factors" and other information included in this prospectus for a discussion of these and other risks and uncertainties that we face.

Recent developments

        The following sets forth our selected unaudited financial data for the three months ended September 30, 2014:

    Net revenues. Our total net revenues for the three months ended September 30, 2014 were RMB220.1 million, as compared to total net revenues of RMB148.3 million for the three months ended September 30, 2013, which was primarily attributable to increases in net revenues from both car rentals and car services.

    Net loss. Our net loss for the three months ended September 30, 2014 was RMB26.9 million, as compared to net losses of RMB38.7 million for the three months ended September 30, 2013, which was primarily attributable to the increase in our total net revenues while our expenses increased at a lower rate during the periods.

    Adjusted EBITDA. Our adjusted EBITDA for the three months ended September 30, 2014 was RMB76.4 million, as compared to adjusted EBITDA of RMB19.5 million for the three months ended September 30, 2013, which was primarily attributable to the increase in our total net revenues.

        For information regarding our Adjusted EBITDA, see "—Summary Consolidated Financial and Operating Data—Non-GAAP financial measure."

        Our selected unaudited financial data for the three months ended September 30, 2014 may not be indicative of our financial results for future interim periods or for the full year ending December 31, 2014. See "Risk Factors—Risks related to our business and industry—Our business is seasonal, and a disruption in our operations during our peak or off peak seasons could materially adversely affect our

 

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results of operations." Please also refer to "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus for information regarding trends and other factors that may affect our results of operations.

        On October 30, 2014, we entered into a framework loan facility agreement with Ctrip Travel Information Technology (Shanghai) Co., Ltd., or Ctrip Travel, an affiliate of Ctrip, pursuant to which Ctrip Travel will extend, through entrusted bank loans, an aggregate amount of RMB300 million loan facility to us before December 31, 2014. The loan facility has a term of three years and bears an interest rate of 8% per annum payable on a quarterly basis. Pursuant to the framework loan facility agreement, we, Ctrip Travel and Agricultural Bank of China will enter into a separate entrusted bank loan agreement to set forth the detailed terms of such loan facility, and we will provide security interest to Ctrip Travel upon entering into the entrusted bank loan agreement.

        On October 31, 2014, Crawford exercised all of the 1,500,000 warrants held by it to purchase 1,500,000 common shares at a per share purchase price of US$5.50.

Our corporate history and structure

        We commenced our business in 2006, which was initially focused on providing car services to premium corporate clients. In 2008, we began to provide car rentals to individual customers. Our company, eHi Car Services Limited (previously known as Prudent Choice International Limited or eHi Auto Services Limited), was incorporated in the Cayman Islands on August 3, 2007. eHi Car Services Limited is a holding company. Currently we operate our car rentals business primarily through our PRC subsidiaries Shanghai eHi Car Rental Co., Ltd., or eHi Rental, and eHi Auto Services (Jiangsu) Co., Ltd., or eHi Jiangsu, and their subsidiaries and branches.

        For our car services business, we provide vehicles and chauffeur services through different subsidiaries under separate contracts. We provide vehicles through eHi Rental and eHi Jiangsu as well as their subsidiaries and branches, and provide chauffeur services through our PRC subsidiary Shanghai Smart Brand Auto Driving Services Co., Ltd., or Shanghai Smart Brand, and its subsidiaries and branches. Our current operations are not subject to the ICP license requirements. To further expand our Internet and mobile services, we entered into a series of contractual arrangements in March 2014 with our PRC incorporated variable interest entity Shanghai eHi Information Technology Service Co., Ltd., or eHi Information, and its shareholders. eHi Information obtained the ICP license from the relevant telecommunication authorities on September 24, 2014. eHi Information currently does not have any operation and we do not expect eHi Information to contribute a material portion of our net revenues and operations in the foreseeable future.

 

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        The following diagram illustrates our anticipated shareholding, voting and principal corporate structure immediately after the completion of this offering, assuming (i) the underwriters do not exercise their option to purchase additional ADSs and (ii) the issuance and sale of 7,692,306 Class A common shares in the concurrent private placement based on the assumed initial public offering price of US$13.00 per ADS, the mid-point of the estimated initial public offering price range shown on the front cover of this prospectus:

GRAPHIC


(1)
Consists of 86,045,911 Class B common shares and 7,692,306 Class A common shares.

(2)
Consists of 20,000,000 Class A common shares.

(3)
eHi Information is a variable interest entity incorporated in China and is 50% owned by Mr. Hongtao Han and 50% owned by Mr. Chun Xie. We effectively control eHi Information through contractual arrangements.

 

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Implications of being an emerging growth company

        As a company with less than $1.0 billion in revenue for our last fiscal year, we qualify as an "emerging growth company" pursuant to the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, in the assessment of the emerging growth company's internal control over financial reporting. As an emerging growth company, we intend to rely on the exemption from auditor attestation requirement under Section 404. The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards. We have elected to "opt out" of this provision and, as a result, we will comply with new or revised accounting standards as required when they are adopted for public companies. This decision to opt out of the extended transition period under the JOBS Act is irrevocable. See "Risk Factors—Risks related to our business and industry—We are an 'emerging growth company' within the meaning of the Securities Act and may take advantage of certain reduced reporting requirements" and "—We will incur increased costs as a result of being a public company, particularly after we cease to qualify as an `emerging growth company.' "

        We will remain an emerging growth company until the earliest of (a) the last day of our fiscal year during which we have total annual gross revenues of at least $1.0 billion; (b) the last day of our fiscal year following the fifth anniversary of the completion of this offering; (c) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt; or (d) the date on which we are deemed to be a "large accelerated filer" under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which would occur if the market value of our ADSs that are held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter. Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above.

Corporate information

        Our principal executive offices are located at Unit 12/F, Building No.5, Guosheng Center, 388 Daduhe Road, Shanghai, 200062, the People's Republic of China. Our telephone number at this address is +86-21-6468-7000. Our agent for service of process in the United States is Law Debenture Corporate Services Inc. located at 400 Madison Avenue, 4th Floor, New York, New York 10017.

        Investors should contact us for any inquiries through the address or telephone number of our principal executive offices. Our principal website is www.1hai.cn. The information contained on our website is not a part of this prospectus.

Conventions which apply to this prospectus

        Except where the context otherwise requires and for purposes of this prospectus only:

    "ADSs" refer to our American depositary shares, each of which represents two Class A common shares, and "ADRs" refer to American depositary receipts, which, if issued, evidence our ADSs;

    "Avis" refers to Avis Rent a Car System, LLC;

    "Avis China" refers to Avis' affiliates in China;

    "CDH" refers to CDH Car Rental Service Limited;

    "China" or the "PRC" refers to the People's Republic of China, excluding, for the purpose of this prospectus only, Taiwan, Hong Kong and Macau;

 

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    "Crawford" refers to The Crawford Group, Inc., the parent company of Enterprise Holdings;

    "Ctrip" refers to Ctrip Investment Holding Ltd. and its affiliates;

    "Dazhong" refers to Dazhong Transportation (Group) Co., Ltd.;

    "eHi Hong Kong" refers to eHi Auto Services (Hong Kong) Holding Limited;

    "eHi Information" refers to Shanghai eHi Information Technology Service Co., Ltd.;

    "eHi Jiangsu" refers to eHi Auto Services (Jiangsu) Co., Ltd.;

    "eHi Rental" refers to Shanghai eHi Car Rental Co., Ltd.;

    "Elite Plus" refers to Elite Plus Developments Limited;

    "Enterprise" refers to Enterprise Holdings and Enterprise China, collectively;

    "Enterprise China" refers to Enterprise Holdings (China) LLC, an affiliate of Enterprise Holdings;

    "Enterprise Holdings" refers to Enterprise Holdings Inc.;

    "Frost & Sullivan" refers to Frost & Sullivan (Beijing) Inc., Shanghai Branch Co., a third-party market research company that we commissioned to provide information on the industry in which we operate;

    "GS Group" refers to GS Car Rental HK Limited and GS Car Rental HK Parallel Limited, collectively;

    "Hertz" refers to The Hertz Corporation;

    "Ignition Group" refers to Ignition Growth Capital I, L.P. and Ignition Growth Capital Managing Directors Fund I, LLC, collectively;

    "JAFCO" refers to JAFCO Asia Technology Fund IV;

    "L&L" refers to L&L Financial Leasing Holding Limited;

    "New Access" refers to New Access Investments Group Limited and New Access Capital International Limited, collectively;

    "Qiangsheng" refers to Shanghai Qiangsheng Holding Co., Ltd.;

    "Qiming Group" refers to Qiming Venture Partners II, L.P., Qiming Venture Partners II-C, L.P. and Qiming Managing Directors Fund II, L.P., collectively;

    "period-end fleet size" refers to the aggregate number of vehicles in our car rentals and car services fleets as of the last day of a given period to which we hold legal title, including vehicles that we have written off in accordance with our accounting policy and vehicles that are currently missing but have not been written off. The period-end fleet sizes of our car rentals or car services were determined based on last orders assigned to our vehicles at the end of any given period;

    "preferred shares" refer to our Class A and Series A, B, C, D and E convertible redeemable preferred shares, par value US$0.001 per share;

    "RMB" or "Renminbi" refers to the legal currency of China, and "$," "dollars," "US$" or "U.S. dollars" refers to the legal currency of the United States;

    "registered members" refer to individuals who have registered accounts with us;

    "Shanghai Smart Brand" refers to Shanghai Smart Brand Auto Driving Services Co., Ltd.;

 

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    "Shanghai Taihao" refers to Shanghai Taihao Financial Leasing Co., Ltd.;

    "shares" or "common shares" refer to our Class A and Class B common shares, par value US$0.001 per share;

    "Shouqi" refers to Shouqi Car Rental Co., Ltd.;

    "Shuzhi" refers to Shuzhi Information Technology (Shanghai) Co., Ltd.;

    "we," "us," "our company," "our" and "eHi" refer to eHi Car Services Limited, its predecessor entities, subsidiaries and variable interest entity; and

    "Yongda" refers to China Yongda Automobiles Services Holdings Limited.

 

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THE OFFERING

        The following information assumes that the underwriters will not exercise their option to purchase additional ADSs in the offering, unless otherwise indicated:

Price per ADS

 

We currently estimate that the initial public offering price will be between US$12.00 and US$14.00 per ADS.

ADSs offered by us

 

10,000,000 ADSs

ADSs outstanding
immediately after this
offering

 

10,000,000 ADSs

Concurrent private
placement

 

Concurrently with, and subject to, the completion of this offering, each of Dongfeng Asset Management Co. Ltd., or Dongfeng Asset Management, China Universal Asset Management Co., Ltd., or CUAM, and Ctrip has agreed to purchase from us US$30 million, US$10 million and US$10 million, respectively, in Class A common shares at a price per share equal to the initial public offering price adjusted to reflect the ADS-to-common-share ratio (the "concurrent private placement"). Assuming an initial offering price of US$13.00 per ADS, the mid-point of the estimated range of the initial public offering price shown on the front cover of this prospectus, Dongfeng Asset Management, CUAM and Ctrip will purchase 4,615,384, 1,538,461 and 1,538,461 Class A common shares from us, respectively. Our proposed issuance and sale of Class A common shares to these investors are being made through private placement pursuant to an exemption from registration with the U.S. Securities and Exchange Commission, or the SEC, under Regulation S of the Securities Act. Each of these investors has agreed with the underwriters not to, directly or indirectly, sell, transfer or dispose of any Class A common shares acquired in the concurrent private placement for a period of 180 days after the date of this prospectus, subject to certain exceptions. See "Underwriting."

Common shares outstanding
immediately after this
offering

 

We will adopt a dual-class voting structure immediately prior to the completion of this offering. 113,738,217 common shares, par value US$0.001 per share, comprised of 27,692,306 Class A common shares, including a total of 7,692,306 Class A common shares we will issue and sell in the concurrent private placement at an assumed initial public offering price of US$13.00 per ADS, the mid-point of the estimated range of the initial public offering price shown on the front cover of this prospectus, and 86,045,911 Class B common shares will be issued and outstanding immediately upon completion of this offering. Class B common shares issued and outstanding immediately after the completion of this offering will represent 75.7% of our total issued and outstanding shares and 96.9% of the then total voting power.

The ADSs

 

Each ADS represents two Class A common shares.

 

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The depositary will be the holder of the Class A common shares underlying the ADSs and you will have rights as an ADS holder as provided in the deposit agreement.

 

We do not expect to pay dividends in the foreseeable future. If, however, we declare dividends on our common shares, the depositary will pay you the cash dividends and other distributions it receives on our Class A common shares, after deducting its fees and expenses.

 

You may surrender your ADSs to the depositary to withdraw Class A common shares underlying your ADSs. The depositary will charge you a fee for such an exchange.

 

We may amend or terminate the deposit agreement for any reason without your consent. If an amendment becomes effective, you will be bound by the deposit agreement as amended if you continue to hold your ADSs.

 

To better understand the terms of the ADSs, you should carefully read the section in this prospectus entitled "Description of American Depositary Shares". You should also read the deposit agreement, which is filed as an exhibit to the registration statement that includes this prospectus.

Common Shares

 

Our common shares will be divided into Class A common shares and Class B common shares immediately prior to the completion of this offering. Holders of Class A common shares and Class B common shares will have the same rights except for voting and conversion rights. In respect of matters requiring a shareholder vote, each Class A common share will be entitled to one vote, and each Class B common share will be entitled to ten votes. Certain matters including those related to the change of control of our company require an additional approval by the holders of a majority of Class A common shares voting as a separate class. Each Class B common share is convertible into one Class A common share at any time by the holder thereof. Class A common shares are not convertible into Class B common shares under any circumstances. Class B common shares will be automatically converted into the same number of Class A common shares under certain circumstances, including any transfer of Class B common shares by a holder thereof to any person or entity which is not an affiliate of such holder. For a description of Class A common shares and Class B common shares, see "Description of Share Capital."

Option to purchase
additional ADSs

 

We have granted the underwriters an option, exercisable within 30 days from the date of this prospectus, to purchase up to an additional 1,500,000 ADSs.

 

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Use of proceeds

 

We intend to use the net proceeds from this offering and the concurrent private placement to expand our fleet and service network, and for general corporate purposes, including working capital and funding potential acquisition of complementary businesses, although we are not currently negotiating any such transactions. See "Use of Proceeds" for more information.

NYSE symbol

 

We have applied to have the ADSs listed on the NYSE under the symbol EHIC. Our ADSs and common shares will not be listed on any other stock exchange or traded on any automated quotation system.

Depositary

 

JPMorgan Chase Bank, N.A.

Directed share program

 

At our request, the underwriters have reserved for sale, at the initial public offering price, up to 5% of the total ADSs offered in this offering, to our directors, officers, employees, business associates and related persons through a directed share program.

Risk factors

 

See "Risk Factors" and other information included in this prospectus for a discussion of risks you should carefully consider before investing in the ADSs.

Lock-up

 

We, our directors, executive officers, existing principal shareholders and certain option holder, as well as Dongfeng Asset Management, CUAM and Ctrip, the investors in the concurrent private placement, have agreed with the underwriters not to sell, transfer or dispose of any ADSs, common shares or similar securities for a period of 180 days after the date of this prospectus. See "Shares Eligible for Future Sale" and "Underwriting" for more information.

 

In addition, we will instruct JPMorgan Chase Bank, N.A., as the depositary, not to accept any deposit of any Class A common shares or issue any ADSs for 180 days after the date of this prospectus unless we otherwise instruct the depositary with the prior written consent of the representatives of the underwriters. The foregoing does not affect the right of ADS holders to cancel their ADSs and withdraw the underlying Class A common shares.

        The number of common shares issued and outstanding immediately after this offering is expected to be 113,738,217, which:

    includes 86,045,911 Class B common shares, assuming the re-designation of 8,046,842 common shares (including 450,000 issued but not fully vested restricted shares pursuant to the 2010 Performance Incentive Plan, or the 2010 Plan) into 8,046,842 Class B common shares immediately upon completion of this offering, and the conversion and re-designation of 77,999,069 preferred shares into an aggregate of 77,999,069 Class B common shares on a one-for-one basis immediately upon completion of this offering;

    excludes 5,143,150 Class B common shares issuable upon the exercise of options granted under the 2010 Plan outstanding as of the date of this prospectus and 377,000 Class B common shares issuable upon the exercise of share options granted to Series A and Series B preferred shareholders outstanding as of the date of this prospectus;

    excludes 1,105,320 Class B common shares reserved for future issuances under the 2010 Plan; and

    excludes 4,000,000 Class A common shares reserved for future issuances under the 2014 Performance Incentive Plan, or the 2014 Plan, which will be conditional on and effective upon completion of this offering.

 

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SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA

        The following summary consolidated statements of comprehensive loss data for the years ended December 31, 2012 and 2013 and the summary consolidated balance sheets data as of December 31, 2012 and 2013 have been derived from our audited consolidated financial statements included elsewhere in this prospectus.

        The following summary consolidated statements of comprehensive loss data for the six months ended June 30, 2013 and 2014 and the summary consolidated balance sheets data as of June 30, 2014 have been derived from our unaudited interim condensed consolidated financial statements included elsewhere in this prospectus. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as our audited consolidated financial statements and include all adjustments, consisting only of normal and recurring adjustments, that we consider necessary for a fair statement of our financial position and operating results for the period presented.

        Our consolidated financial statements are prepared and presented in accordance with generally accepted accounting principles in the United States, or U.S. GAAP. Our historical results do not necessarily indicate our results expected for any future periods. Our summary consolidated financial data also includes certain non-GAAP financial measures, which are not required by, or presented in accordance with, U.S. GAAP, but are included because we believe they are indicative of our operating performance and are used by investors and analysts to evaluate companies in our industry. The following summary consolidated financial data should be read in conjunction with, and are qualified in their entirety by reference to, our consolidated financial statements and the related notes, and

 

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"Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus.

 
  For the Year Ended December 31,   For the Six Months Ended June 30,  
 
  2012   2013   2013   2014  
 
  RMB   % of Net
Revenues
  RMB   US$   % of Net
Revenues
  RMB   % of Net
Revenues
  RMB   US$   % of Net
Revenues
 
 
  (in thousands, except percentages, share and per share data)
 

Summary consolidated statements of comprehensive loss data

                                                             

Net revenues

    450,085     100.0 %   566,394     91,301     100.0 %   260,656     100.0 %   384,538     61,986     100.0 %

Vehicle operating expenses(1)

    (432,448 )   (96.1 )   (526,446 )   (84,861 )   (92.9 )   (237,915 )   (91.3 )   (316,013 )   (50,940 )   (82.2 )

Selling and marketing expenses(1)

    (38,209 )   (8.5 )   (40,439 )   (6,519 )   (7.1 )   (18,140 )   (7.0 )   (16,027 )   (2,583 )   (4.2 )

General and administrative expenses(1)

    (94,431 )   (21.0 )   (112,416 )   (18,121 )   (19.8 )   (56,116 )   (21.5 )   (55,963 )   (9,021 )   (14.6 )

Other operating income

    11,041     2.5     13,549     2,184     2.3     1,894     0.7     12,682     2,044     3.3  
                                           

Total operating expenses

    (554,047 )   (123.1 )   (665,752 )   (107,317 )   (117.5 )   (310,277 )   (119.1 )   (375,321 )   (60,500 )   (97.7 )
                                           

Profit/(Loss) from operations

    (103,962 )   (23.1 )   (99,358 )   (16,016 )   (17.5 )   (49,621 )   (19.1 )   9,217     1,486     2.3  
                                           

Interest income

    1,146     0.3     360     58     0.1     201     0.1     2,832     456     0.7  

Interest expense

    (66,636 )   (14.8 )   (50,880 )   (8,202 )   (9.0 )   (34,535 )   (13.2 )   (30,954 )   (4,989 )   (8.0 )

Other income (expenses), net

    (1,046 )   (0.3 )   (1,108 )   (178 )   (0.3 )   (380 )   (0.1 )   (397 )   (64 )   (0.1 )
                                           

Loss before income taxes

    (170,498 )   (37.9 )   (150,986 )   (24,338 )   (26.7 )   (84,335 )   (32.3 )   (19,302 )   (3,111 )   (5.1 )
                                           

Provision for income taxes

    (5,212 )   (1.1 )   (1,228 )   (198 )   (0.2 )   (695 )   (0.3 )   (1,384 )   (223 )   (0.4 )

Net loss

    (175,710 )   (39.0 )   (152,214 )   (24,536 )   (26.9 )   (85,030 )   (32.6 )   (20,686 )   (3,334 )   (5.5 )

Accretion on convertible redeemable preferred shares to redemption value

    (155,053 )   (34.5 )   (191,135 )   (30,810 )   (33.7 )   (94,064 )   (36.1 )   (135,753 )   (21,883 )   (35.3 )

Deemed contribution from preferred shareholders at extinguishment of convertible bonds

            16,751     2,700     3.0                      

Deemed dividends to preferred shareholders at extinguishment of convertible bonds and promissory note

            (44,164 )   (7,119 )   (7.8 )                    

Modification of warrants

            (1,021 )   (165 )   (0.2 )                    
                                           

Net loss attributable to common shareholders

    (330,763 )   (73.5 )   (371,783 )   (59,930 )   (65.6 )   (179,094 )   (68.7 )   (156,439 )   (25,217 )   (40.8 )
                                           
                                           

Weighted average number of common shares used in computing net loss per share—basic and diluted

    6,096,842           6,096,842     6,096,842           6,096,842           6,096,842     6,096,842        

Net loss per common share attributable to common shareholders—basic and diluted

    (54.25 )         (60.98 )   (9.83 )         (29.37 )         (25.66 )   (4.14 )      

Adjusted EBITDA(2)

   
68,882
   
15.3
   
102,061
   
16,452
   
18.0
   
45,688
   
17.5
   
133,030
   
21,444
   
34.6
 

(1)
Include share-based compensation charges of RMB6.7 million and RMB6.2 million (US$1.0 million) in 2012 and 2013, respectively, and RMB3.3 million and RMB2.3 million (US$0.4 million) in the six months ended June 30, 2013 and 2014, respectively, allocated as follows:

   
  For the Year Ended December 31,   For the Six Months Ended June 30,  
   
  2012   2013   2013   2014  
   
  RMB   RMB   US$   RMB   RMB   US$  
   
  (in thousands)
 
 

Vehicle operating expenses

    81     29     5     7     7     1  
 

Selling and marketing expense

    35     9     1     58     51     8  
 

General and administrative expenses

    6,567     6,168     994     3,218     2,203     356  
                             
 
 

Total share-based compensation expense

    6,683     6,206     1,000     3,283     2,261     365  
                             
 
 
                             
(2)
See "—Non-GAAP financial measure".

 

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  As of December 31,   As of June 30,  
 
  2012   2013   2014  
 
  RMB   RMB   US$   RMB   US$   RMB   US$   RMB   US$  
 
   
   
   
   
   
  Pro forma(1)
  Pro forma as adjusted(2)
 
 
  (in thousands)
 

Summary consolidated balance sheets data

                                                       

Cash and cash equivalents

    133,453     630,733     101,672     318,083     51,274     368,789     59,448     1,381,855     222,751  

Total current assets

    239,192     803,742     129,561     623,297     100,473     676,003     108,647     1,687,069     271,950  

Cost method investment

                153,820     24,795     153,820     24,795     153,820     24,795  

Property and equipment, net

    844,380     1,062,331     171,244     1,412,713     227,725     1,412,713     227,725     1,412,713     227,725  

Vehicle purchase deposits

        119,173     19,210     193,352     31,168     193,352     31,168     193,352     31,168  

Total assets

    1,116,659     2,026,422     326,652     2,435,023     392,518     2,485,728     400,692     3,498,794     563,995  

Short-term borrowings

    171,823     219,640     35,405     346,446     55,846     346,446     55,846     346,446     55,846  

Total current liabilities

    531,773     333,475     53,755     441,591     71,183     441,591     71,183     441,591     71,183  

Long-term borrowings

    6,483     375,726     60,566     540,216     87,081     540,216     87,081     540,216     87,081  

Total liabilities

    543,506     709,552     114,377     981,842     158,270     981,842     158,270     981,842     158,270  

Total mezzanine equity

    1,169,640     2,273,521     366,484     2,563,271     413,191                  

Total shareholders' equity (deficits)

    (596,487 )   (956,651 )   (154,209 )   (1,110,090 )   (178,943 )   1,503,886     242,422     2,516,952     405,725  

(1)
The pro forma balance sheet information as of June 30, 2014 assumes (i) the re-designation of all of our issued and outstanding common shares as of June 30, 2014 into 6,096,842 Class B common shares and the automatic conversion and re-designation of all of our issued and outstanding preferred shares as of June 30, 2014 into 77,999,069 Class B common shares immediately prior to the completion of this offering; and (ii) the exercise of 1,500,000 warrants by Crawford to purchase 1,500,000 common shares on October 31, 2014 and the re-designation of such common shares into 1,500,000 Class B common shares immediately prior to the completion of this offering.

(2)
The pro forma as adjusted balance sheet information as of June 30, 2014 assumes (i) the re-designation of all of our issued and outstanding common shares as of June 30, 2014 into 6,096,842 Class B common shares and the automatic conversion and re-designation of all of our issued and outstanding preferred shares as of June 30, 2014 into 77,999,069 Class B common shares immediately prior to the completion of this offering; (ii) the exercise of 1,500,000 warrants by Crawford to purchase 1,500,000 common shares on October 31, 2014 and the re-designation of such common shares into 1,500,000 Class B common shares immediately prior to the completion of this offering; and (iii) the net proceeds we will receive in this offering and the concurrent private placement.

Non-GAAP financial measure

        To supplement our consolidated financial statements which are presented in accordance with U.S. GAAP, we use adjusted EBITDA as a non-GAAP financial measure. Adjusted EBITDA represents net income or loss before depreciation and amortization, share-based compensation, interest expenses, interest income and provision for income taxes. We present adjusted EBITDA because it is used by our management to evaluate our operating and financial performance. We also believe that adjusted EBITDA provides useful information to investors and others in understanding and evaluating our consolidated results of operations in the same manner as our management and in comparing financial results across accounting periods.

 

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        The following table reconciles our adjusted EBITDA in 2012 and 2013, and for the six months ended June 30, 2013 and 2014, to the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP, which is net loss:

 
  For the Year Ended December 31,   For the Six Months Ended June 30,  
 
  2012   2013   2013   2014  
 
  RMB   RMB   US$   RMB   RMB   US$  
 
  (in thousands)
 

Net loss

    (175,710 )   (152,214 )   (24,536 )   (85,030 )   (20,686 )   (3,334 )

Add (subtract):

                                     

Depreciation and amortization

    167,207     196,321     31,646     92,406     121,949     19,657  

Share-based compensation

    6,683     6,206     1,000     3,283     2,261     365  

Interest expenses

    66,636     50,880     8,202     34,535     30,954     4,989  

Interest income

    (1,146 )   (360 )   (58 )   (201 )   (2,832 )   (456 )

Provision for income taxes

    5,212     1,228     198     695     1,384     223  
                           

Adjusted EBITDA

    68,882     102,061     16,452     45,688     133,030     21,444  
                           
                           

        The use of adjusted EBITDA has certain limitations because it does not reflect all items of income and expense that affect our operations. Items excluded from adjusted EBITDA are significant components in understanding and assessing our operating and financial performance. Depreciation and amortization, share-based compensation, interest expenses, interest income and provision for income taxes have been and may continue to be incurred in our business and are not reflected in the presentation of adjusted EBITDA. Each of these items should also be considered in the overall evaluation of our results. Additionally, adjusted EBITDA does not consider capital expenditures and other investing activities and should not be considered as a measure of our liquidity. We reconcile this non-GAAP financial measure to the nearest U.S. GAAP performance measure, all of which should be considered when evaluating our performance. The term adjusted EBITDA is not defined under U.S. GAAP, and adjusted EBITDA is not a measure of net income or loss, operating income or loss, operating performance or liquidity presented in accordance with U.S. GAAP. When assessing our operating and financial performance, you should not consider such data in isolation or as a substitute for our net income or loss, operating income or loss or any other operating performance measure that is calculated in accordance with U.S. GAAP. Furthermore, adjusted EBITDA may differ from the non-GAAP information used by other companies, including peer companies, and therefore comparability may be limited. We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure.

 

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Summary operating data

        The following tables set forth our key operating metrics as of the dates and for the periods indicated:

Period-end fleet size(1)

 
  As of
December 31,
  As of
June 30,
 
 
  2012   2013   2013   2014  

Car rentals

    8,957     10,500     9,610     14,260  

Car services

    872     1,086     969     1,149  
                   

Total

    9,829     11,586     10,579     15,409  
                   
                   

(1)
"Period-end fleet size" refers to the aggregate number of vehicles in our car rentals and car services fleets as of the last day of a given period to which we hold legal title, including vehicles that we have written off in accordance with our accounting policy and vehicles that are currently missing but have not been written off. As of June 30, 2014, we had written off a total of 127 vehicles since our inception.

Car rentals and car services

 
  For the Year Ended
December 31,
  For the
Six Months Ended
June 30,
 
 
  2012   2013   2013   2014  

Average available fleet size(1)

    8,484     9,937     9,541     13,289  

RevPAC (RMB)(2)

    145     156     151     160  

Car rentals

 
  For the Year Ended
December 31,
  For the
Six Months Ended
June 30,
 
 
  2012   2013   2013   2014  

Average available fleet size(1)

    7,704     8,987     8,686     12,212  

RevPAC (RMB)(2)

    104     115     111     121  

Fleet utilization rate (%)(3)

    72.0     70.5     68.4     70.9  

Average daily rental rate (RMB)(4)

    145     163     163     171  

Car services

 
  For the Year Ended
December 31,
  For the
Six Months Ended
June 30,
 
 
  2012   2013   2013   2014  

Average available fleet size(1)

    780     950     855     1,077  

RevPAC (RMB)(2)

    549     546     553     600  

(1)
"Average available fleet size" is calculated by dividing the aggregate number of days in which our fleet was in operation during a given period by the total number of days during the same period. In determining the size of our fleet in operation, we include all vehicles in our car rentals and car services fleets except for vehicles that have been written off in accordance with our accounting policy and vehicles that have not been consistently made

 

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    available for rent and that we may consider to dispose when appropriate opportunities arise.

(2)
"RevPAC" refers to average daily net revenue per available car, which is calculated by dividing the net revenues during a given period by the aggregate number of days in which our fleet was in operation during the same period.

(3)
"Fleet utilization rate" refers to the aggregate transaction days for our car rental fleet during a given period divided by the aggregate days our car rental fleet are in operation during the same period. "Transaction days" refer to the aggregate number of days on which a vehicle in our car rental or car services fleet was on rent during a given period.

(4)
"Average daily rental rate" refers to RevPAC during a given period divided by the fleet utilization rate during the same period.

        See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Key operating metrics" for more information on our non-financial key operating metrics. There is no industry norm with respect to the calculations of these operating metrics. As a result, our operating metrics may not be comparable to those used by other industry participants.

 

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RISK FACTORS

        Investing in our ADSs involves a high degree of risk. You should carefully consider the following risks and all other information contained in this prospectus, including our consolidated financial statements and related notes, before deciding to buy our ADSs. If any of the following risks materialize, our business, prospects, financial condition and results of operations could be materially harmed, the trading price of our ADSs could decline and you may lose part or all of your investment.

Risks related to our business and industry

We have a history of operating and net losses, and we may not be able to achieve and sustain profitability.

        We have a history of operating and net losses and may continue to incur operating and net losses in the future. For the years ended December 31, 2012 and 2013, we incurred loss from operations of RMB104.0 million and RMB99.4 million (US$16.0 million), respectively, and net losses of RMB175.7 million and RMB152.2 million (US$24.5 million), respectively. For the six months ended June 30, 2014, we generated profit from operations of RMB9.2 million (US$1.5 million), while still incurred net loss of RMB20.7 million (US$3.3 million). Our historical operating and net losses were primarily due to significant upfront investments in connection with the expansion of our nationwide service network and infrastructure in recent years, which expose us to significant fixed costs and expenses. If market demand for our car rentals and car services does not increase as quickly as we have anticipated, or if there is a rapid and unexpected decline in such demand, we may be unable to generate sufficient revenues to offset these fixed costs and achieve economies of scale, and our operating results may be materially adversely affected as a result of high operating expenses and underutilized capacity.

        In addition, our ability to achieve profitability is affected by various factors, many of which are beyond our control. For example, our revenues and profitability depend on the continuous growth of the car rental and car service industry in China and customer demands for such services. We cannot assure you that car rentals and car services, as relatively new alternatives to car ownership, will become widely accepted in China. Furthermore, vehicle purchases have historically accounted for the majority of our capital expenditures. We expect to continue to incur significant costs and expenses to increase the scale of our operations, which may make it difficult for us to achieve and sustain profitability.

        Furthermore, our historical and future results of operations in a specific period may be subject to the impact of various factors and events, which may make our results of operations in different periods less comparable with each other and may not be necessarily indicative of future trends. While we intend to implement various measures to control the increases in our vehicle operating expenses as we ramp up our business rapidly, we cannot assure you that these measures will be as effective as we currently expect, or at all. If we cannot significantly increase our net revenues to offset our continuously increasing operating and other expenses, we will continue to incur losses and our business, financial condition and results of operations will be materially and adversely affected. We may also incur significant losses in the future for a number of other reasons, including changes in the macroeconomic and regulatory environment, competitive dynamics, our inability to respond to these changes in a timely and effective manner and the other risks described in this prospectus, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown events.

We face risks arising from our heavy reliance on proprietary technology platform.

        We rely heavily on our proprietary technology platform with various features specifically designed to improve and streamline our operations in accepting reservations, processing payments, managing our fleet, accounting for our various business activities and otherwise conducting our business. The satisfactory performance, reliability and availability of our proprietary technology platform are critical to our reputation, our ability to attract and retain customers and maintain adequate service levels. Any system interruption that results in the unavailability of our website or a disruption in our proprietary

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technology platform could result in negative publicity, damage our reputation and brand and cause our business and operating results to suffer. We may experience temporary system interruptions for a variety of causes, including network failures, power failures, cyber attacks, software errors or an overwhelming user traffic to our website during periods of strong demand. Because we are dependent in part on third parties for the implementation and maintenance of certain aspects of our systems and because some of the causes of system interruptions may be outside of our control, we may not be able to remedy such interruptions in a timely manner, or at all. Although we regularly back up our data on servers in different locations or on hard drives stored in our offices, there can be no assurance that our systems back-up will successfully mitigate or eliminate these risks. Any disruption, termination, or provision of substandard services could adversely affect our brand, customer relationships, operating results and financial conditions.

We face intense competition, and if we fail to compete effectively, we may lose market share, our revenues and margin may decrease and our results of operations may be adversely affected.

        The car rental and car service industry in China is competitive and fragmented. In 2013, the top three players, including us, only accounted for 10.7% of the total market share by revenues in China, according to Frost & Sullivan. We expect competition in China's car rental and car service industry to persist and intensify.

        As we provide comprehensive service offerings, we compete with different market participants in different market sectors at different levels. We currently compete primarily with national and international players, such as CAR Inc. and Avis China, and regional players, such as Yongda, Qiangsheng and Shouqi.

        For car rentals, we compete primarily on the basis of rental price, user experience, brand recognition, convenience of service locations, geographic coverage and service quality. For car services, we compete primarily on the basis of quality and convenience of services, ability to provide tailored solutions and timely response to ad-hoc situations, brand recognition, network coverage, and, to a lesser extent, service charge. Competition in the car rental market frequently takes the form of price competition. Our competitors, some of which may have access to greater financial resources, often seek to compete aggressively on the basis of pricing. If we do not price our services competitively, we may lose rental volume, or if we do, our revenue and margins will suffer, either of which could have a material adverse impact on our results of operations.

        In addition, technological advances may materially impact the competitive landscape of China's car rental and car service industry and our competitiveness in the evolving industry. For example, an increasing number of customers in China have chosen to reserve car rental services through websites or mobile applications due to the convenience of these channels. As a result, it is critical for us to continue to enhance and improve the responsiveness, functionality and features of our websites and mobile applications to remain competitive. The development of websites, mobile applications and other proprietary technology requires substantial expenditures and resources, and entails significant technical and business risks. Our competitors may use new technologies more effectively, develop more appealing and popular websites and mobile applications, or adapt more quickly than us to evolving industry trends or changing market requirements. Some of our competitors may form closer relationships with, or be acquired by, major Internet companies in China. Furthermore, the proliferation of the Internet has increased the price transparency among car rental companies by enabling cost-conscious customers to more easily obtain the lowest rates available among car rental companies for any given trip. Such increased price transparency may further contribute to the prevalence and intensity of price competition in the future.

        Our competitors may also compete against us in the selection of new service locations, or offer better terms for our existing leased properties, thereby slowing down our anticipated expansion. Furthermore, some competitors may initiate negative publicity campaigns against us, which may harm

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our brand and reputation. If we fail to effectively compete with large players on scale or small players on cost and flexibility, we may not be able to compete successfully against our current and future competitors.

We may not be able to sustain our growth rates or manage our expansion plan, which could adversely affect our operating results.

        We have experienced significant growth in recent years. Our total net revenues increased from RMB450.1 million in 2012 to RMB566.4 million (US$91.3 million) in 2013, representing a growth rate of 25.8%. Our total net revenues increased from RMB260.7 million for the six months ended June 30, 2013 to RMB384.5 million (US$62.0 million) for the six months ended June 30, 2014, representing a growth rate of 47.5%, although we recorded net losses of RMB175.7 million, RMB152.2 million (US$24.5 million), RMB85.0 million and RMB20.7 million (US$3.3 million) in 2012, 2013 and the six months ended June 30, 2013 and 2014, respectively. We increased the size of our fleet from 7,717 vehicles as of January 1, 2012 to 15,409 vehicles as of June 30, 2014 and we had 760 directly operated service locations in 90 cities across China as of June 30, 2014. We may not be able to sustain these high growth rates in future periods and you should not rely on the growth in our revenue or fleet size in any prior period as an indication of our future performance.

        We plan to continue to expand our fleet size and geographic coverage. We believe geographical expansion is particularly important for us to acquire more customers and enhance our brand recognition. Nonetheless, expanding into new geographical markets imposes additional burdens on our managerial, financial, operational, information technology and general administrative resources. Our planned expansion will also require us to maintain consistent and high-quality services to ensure our brand does not suffer as a result of any deviations, whether actual or perceived, in our service quality. As China is a large and diverse market, business travel or leisure travel demands may vary significantly by region. As a result, we may not be able to leverage our experience in the markets in which we currently operate to expand into other parts of China, and we cannot assure you that we will be able to effectively manage the growth of our operations or maintain our service quality. If we are unable to expand our operations in a timely and cost effective manner, our results of operations may be materially adversely affected.

If we are unable to dispose of our used vehicles at desirable prices or timing or through appropriate channels, the residual value of our fleet may drop significantly and we may incur significant financial losses.

        We generally hold vehicles in our fleet for a term of three to four years. Depending on the conditions of our vehicles, our actual vehicle holding period may vary. As our fleet grows and matures, we expect vehicle dispositions to become a significant part of our operations. We have developed an internal rating system to assess the general conditions of our vehicles, and dispose of our used vehicles through a variety of disposition channels according to the rating results, including auctions, brokered sales, dealers and online used car marketplace. We also maintain a well-managed and disciplined vehicle disposition process taking into consideration of market timing, disposal price and seasonality. Given that China's used vehicle market is still at its early stage and lacks a well-established credit system, we face uncertainties in our ability to dispose of our used vehicles at reasonable prices, in a timely manner or through appropriate channels. In addition, as there is no guaranteed minimum residual value or repurchase program with automobile manufacturers available in China, we are not able to enjoy the guaranteed minimum residual value of our vehicles similar to the programs which are usually made available to U.S. car rental companies. Therefore, we carry substantial risk that the market value of a used vehicle at the time of its disposition may be less than its estimated residual value at such time. If we are unable to dispose of our used vehicles at prices that are equal to or greater than their estimated residual value, our depreciation costs will increase and we will incur losses resulting from the disposal, which may have material and adverse impact on our financial results. As

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our fleet size continues to grow, inability to dispose our used vehicles at desirable prices or timing or through appropriate channels could have significant impact on our business.

Our limited operating history in an emerging and rapidly evolving industry may not provide an adequate basis on which to evaluate our business and future prospects.

        We have a limited operating history. We began to provide chauffeured car services and car rental services in 2006 and 2008, respectively. We believe our future success depends on our ability to significantly increase revenues as well as achieve profitability from our operations. Our limited operating history makes it difficult to evaluate our business and future prospects. You should consider our future prospects in light of the risks and challenges encountered by a company with a limited operating history in an emerging and rapidly evolving industry. These risks and challenges include, among other things,

    our ability to continue our growth as well as achieve and maintain profitability;

    preservation of our competitive position in the car rental and car service industry in China;

    providing consistent and high-quality services to attract and retain individual customers and corporate clients;

    our ability to implement our strategies and make timely and effectively respond to competition and changes in customer preferences;

    our ability to increase awareness of our "eHi" brand and continuing to develop customer loyalty; and

    recruitment, training and retaining of qualified managerial and other personnel.

Our failure to raise sufficient capital to fund and expand our operations at a reasonable cost could reduce our ability to compete successfully.

        Our business requires a significant amount of capital in large part because we are prompted to continue to grow our fleet and expand our business in existing markets and to additional markets where we currently do not have operations. Our capital expenditures totaled RMB286.6 million, RMB601.1 million (US$96.9 million) and RMB579.7 million (US$93.4 million) in 2012, 2013 and the six months ended June 30, 2014, respectively, which were primarily used for vehicle purchases. We may require additional funding to implement our expansion strategy by offering additional equity or debt securities or obtaining additional credit facilities in the future. The sale of additional equity or equity-linked securities could result in dilution of your shareholdings. As we engage in debt financing, our ability to incur additional indebtedness may be restricted. Our ability to obtain additional capital on acceptable terms is subject to a variety of uncertainties, including:

    economic, political and other conditions in China and elsewhere;

    our future results of operations, financial condition and cash flows; and

    general market conditions for capital raising activities in our industry.

        If we fail to raise sufficient capital to fund and expand our operations at a reasonable cost, we may not be able to, among others:

    increase our fleet size;

    expand our operations in current or additional cities in China;

    enhance our sales and marketing and strengthen our general and administrative teams;

    continue to improve our proprietary technology platform;

    acquire businesses complementary to ours;

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    hire, train and retain qualified employees;

    develop and introduce service enhancements to our clients; or

    respond to competitive pressures or unanticipated working capital requirements.

Uncertainties regarding the growth and profitability of the car rental and car service industry in China could adversely affect our revenues and business prospects.

        Currently all of our revenues are generated from our car rentals and car services. While car rentals and car services have existed in China since the 1990s, the long-term prospects of the car rental and car service industry in China remain relatively untested. Our future operating results will depend on numerous factors affecting the development of the car services industry in China, some of which may be beyond our control. These factors include:

    the growth of demand for car rentals and car services in China, and the rate of any such growth;

    the trust and confidence level of customers in car rentals and car services providers in China, as well as changes in customer demographics and preferences;

    the selection, price and popularity of vehicles that we and our competitors offer;

    the emergence of alternative transportation service models that better address the needs of customers in China;

    general economic conditions, particularly economic conditions affecting discretionary consumer spending; and

    the legal environment that may impact our business operations or expansions.

        A decline in the popularity of driving, car rentals or car services in general, or any failure by us to adapt our business model and improve customer experience in response to trends and customer needs and preferences, will adversely affect our revenues and prospects.

Various government policies on automobile control and management, such as vehicle plate control and restrictions on automobile purchases and ownership, may increase our operating costs, limit our future expansion or otherwise adversely affect our business, results of operations and prospects.

        The significant increase in the number of vehicles in China, primarily in major cities, and the traffic and pollution resulting from this increase have drawn the attention of both the government and the public. To address this issue, local governments in China have promulgated various policies to limit the increase in the number of vehicles, such as restricting the number of new local vehicle plates issued. For example, Beijing, Shanghai, Guangzhou, Tianjin, Hangzhou and Guiyang city governments have adopted policies regarding issuing a limited number of local vehicle plates and/or restricting the entrance of vehicles with non-local vehicle plates into certain areas of the city. In addition, some cities in China, such as Beijing, Nanchang, Chengdu and Guiyang, also implemented traffic control measures banning vehicles with certain license plate numbers to be on the road or into certain areas of the city during certain hours in a workday or certain days in a given week. If more cities adopt vehicle plate control policies, our costs to obtain new vehicle plates in such cities may significantly increase and our future expansion in these cities may be limited, which may materially and adversely affect our business, results of operations and prospects. In addition, if a large number of our rental cars is found in violation of these traffic control measures, we may be subject to fines for such violations which may increase our operating costs and expenses.

        Other government policies on automobile purchases, ownership, related taxes and other charges may also have a material effect on our business. In the past years the PRC government has provided some tax reductions or government subsidies on certain types of automobile purchases. We are not in a position to predict whether any tax reduction or government subsidy for automobile purchases will be

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granted or continued in the future. In the event that any adverse changes of existing government policies on automobile purchases, ownership, related taxes and other charges are adopted by the PRC government, it may materially and adversely affect our results of operations and limit our further expansion.

Our business is seasonal, and a disruption in our operations during our peak or off peak seasons could materially adversely affect our results of operations.

        We generally experience some effects of seasonality due to increases in leisure travel and decreases in business travel activities during the summer season and public holidays in China such as Chinese New Year, Labor Day, and National Day, although the seasonal impacts on our car rentals and car services may, to some extent, be offset by each other. In addition, we typically launch promotions for certain car rentals and car services in selected cities after major holidays in China. Seasonal changes in our revenues do not alter certain of our expenses, like depreciation, rent and insurance, that are fixed in the short run, typically resulting in higher profitability in periods when our revenues are higher and lower profitability in periods when our revenues are lower. Our revenues may also fluctuate due to inclement weather conditions, such as snow or rain storms. In addition, other seasonality trends may develop and the existing seasonality that we experience may change.

Unidentified individuals claiming to be company employees with information about the operations of our company have alleged that we have publicly misrepresented financial information and key operating metrics. Our company has investigated these allegations and determined they are without merit. However the public dissemination of these allegations could affect our reputation, our business, the market for our securities and the price of our ADSs.

        In October 2014, our independent registered public accounting firm, PricewaterhouseCoopers Zhong Tian LLP ("PwC"), received a letter from one or more unidentified individuals claiming to be a group of company employees and alleging that we had misrepresented our financial performance and key operating metrics in the registration statement and prospectus that we had filed with the SEC earlier that month. The underwriters whose names appeared on the cover of the registration statement we filed in October 2014 also received a similar letter. The unidentified author or authors of the letter appeared to have had access to information about our company not in the public domain. They alleged that we had: (i) misrepresented the size of our fleet by including certain cars that were lost or otherwise no longer in our possession; (ii) misrepresented the size of our fleet by including certain cars, even though those cars were allegedly no longer suitable for rental or otherwise no longer operating, and accounted for those cars on our balance sheet at a high residual value, above their actual residual value, because we allegedly set a low depreciation rate; (iii) exaggerated fleet utilization rates by counting lost and idle cars as if they were still operating rental cars, and thus inflated our rental transaction volume; (iv) fabricated contracts to generate phony rental revenue from lost and idle cars, and increasingly so during the period leading up to this offering; (v) set up or acquired several sham companies for the purpose of engaging in fake transactions with us in the first two quarters of 2014; (vi) misrepresented our costs by delaying payments to a large number of third-party service providers in the first two quarters of 2014; and (vii) inflated the amount of traffic to our website (as measured by Alexa, an internet data provider) by hiring a traffic-generating service provider (collectively, the "Allegations"). In support of the Allegations, the unidentified author or authors provided lists of allegedly lost or idle vehicles identified by license plate and vehicle identification number, screen shots of our internal system data, charts providing financial information and operating metrics, and tables comparing our web traffic to that of other companies. The unidentified author or authors of the letter, however, declined to provide additional information including contact details when asked. They have also refused requests to identify themselves or to speak with our company or the lead underwriters.

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        Promptly after receiving a copy of the letter, the law firm of O'Melveny & Myers LLP ("OMM") was instructed to conduct an investigation into the Allegations at the direction of our audit committee. OMM then retained Kroll Associates (Asia) Limited ("Kroll"), an international investigations and forensic accounting firm to assist with its investigation. OMM undertook an extensive investigation with the assistance of Kroll. Among other things, they: (i) reviewed commercial and accounting records documenting the disposition of each car, conducted field sightings of all allegedly lost cars that were accessible and reviewed company records documenting recent rental activity for those that were not; (ii) reviewed the residual value for a sample of vehicles listed as idle, compared market price quotations obtained by us from used car auction operators for vehicles in the sample, reviewed vehicle operating history reports for idle vehicles with reported rental activity in 2014, conducted field inspections to document the location and apparent condition of a sample of allegedly idle cars and reviewed company records to verify the current operating status of all allegedly idle cars; (iii) analyzed management's explanation of the calculation of industry metrics and different methods of calculating fleet size; (iv) reviewed records of a sample of rental transactions involving allegedly idle cars and analyzed management's explanation of the calculation errors and methodological flaws in the letter's allegations regarding "fabricated" increases in rental revenue; (v) reviewed records for a sample of high-volume customers of car services for indications of phony transactions, monitored service calls by customer service representatives to corporate customers in the sample to determine whether the customers were actual users of the car services and conducted background checks on customers in the sample; (vi) reviewed service agreements and accounting reports to test for manipulation of cost data and monitored calls to a sample of our suppliers to test whether they would confirm the company's compliance with payment terms; and (vii) reviewed our vendor lists to identify payments to any known traffic-generating services doing business in China and interviewed relevant company personnel. Based on their investigation, OMM concluded that the Allegations are without merit. We also concluded that the Allegations are without merit. PwC has considered the results of OMM's work and also performed additional audit procedures. It did not qualify or modify its audit report on our consolidated financial statements for the years or periods affected by the Allegations, including the financial statements incorporated herein.

        On November 12, 2014, PwC received a communication from a non-employee who allegedly obtained information from one of our employees, alleging that (i) certain cars in our fleet were not suitable for rental and were accounted for at a high residual value above their actual residual value, and (ii) we had misrepresented the size of our fleet by including certain cars that were lost. These allegations mirror those made in the letters received in October 2014 by PwC and the underwriters whose names appeared on the cover of the registration statement. With respect to the allegation that certain cars in our fleet were not suitable for rental and were accounted for at a high residual value above their actual residual value, the majority of the cars identified in the November 12, 2014 communication were included in the October 2014 communication. With respect to the allegation that we had misrepresented the size of our fleet by including certain cars that were lost, all of the cars identified in the November 12, 2014 communication were included in the October 2014 communication. We instructed OMM to conduct a supplemental investigation into the allegations contained in the November 12, 2014 communication. Based on that supplemental investigation, OMM concluded that the allegations in the November 12, 2014 communication are without merit. After conducting further procedures to evaluate the vehicles identified in the November 12, 2014 communication, as well as the source of the allegations contained therein, we have concluded that the allegations in the November 12, 2014 communication are without merit and that the accounting treatment of the additional identified cars is consistent with our policies as described in the registration statement.

        We are in the process of investigating the possible theft of company information that has been used out of context in these allegations, which includes conducting interviews with certain employees that may have access to this information. We also intend to refer these incidents to appropriate authorities.

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        Nevertheless, the author or authors of the letter or the communication could reiterate their allegations in a public forum. They could contact the press or publish the allegations on the internet, and it is possible that the allegations would then result in adverse publicity for our company. That publicity could have a materially adverse effect on our business and our reputation, and as a result, could adversely affect the market for our securities or the price of our ADSs.

        In addition, the author or authors of the letter or the communication have said in correspondence that they intend to release their allegations publicly. If they do, it is likely that one or more investors will file a securities class action or other lawsuits against us, our management and our directors. Even though the allegations are without merit, any such lawsuit, and any additional allegations of misrepresentation, fraud or other inappropriate business practices, could harm our reputation and business, and could distract our management from day-to-day operations of our business. We cannot assure you that we will be able to obtain the dismissal of any such lawsuits, even if they are without merit. We will also incur costs in managing and defending any such litigation and may incur related indemnity obligations. We may need to pay damages or settle any such litigation with a substantial amount of cash. These costs could have a material adverse impact on our business, our reputation, our results of operation and cash flow.

        We are committed to properly handling complaints received by us or any confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters. However, we reserve the right to take necessary legal actions which we consider appropriate to protect our rights and reputation against any malicious complaints or allegations.

We may be the subject of anti-competitive, harassing, or other detrimental conduct by third parties including malicious allegations and detrimental adverse publicity, which could harm our reputation and adversely affect our business and the trading price of our ADSs.

        We have been, and in the future may be, the target of anti-competitive, harassing, or other detrimental conduct by third parties. Such conduct includes malicious allegations, anonymous or otherwise, regarding our personnel, business, operations, accounting, prospects or business ethics. Additionally, allegations, directly or indirectly against us, may be posted in internet chat-rooms or on blogs, social networks websites or any other websites by anyone on an anonymous basis. We have been, and in the future may be, required to expend significant time and incur substantial costs to address such malicious allegations or other detrimental conduct. Our reputation may also be negatively affected as a result of the public dissemination of such malicious allegations, which in turn could adversely affect our business and the trading price of our ADSs.

If we are unable to enhance our brand recognition and maintain a high level of customer satisfaction, we may not be able to attract or retain customers, and our brand and results of operations may be adversely affected.

        We believe our "eHi" brand is integral to our success, including the success of our sales and marketing efforts and our efforts to grow our car rentals and car services business. Our continued success in enhancing our brand depends, to a large extent, on our ability to consistently provide quality services and customer experience across our service network and introduce new services and vehicle models to meet customer demands, and to respond to competitive pressures and changing regulatory environment. Failure to provide customers with high-quality services and experiences could harm our reputation and adversely affect our efforts to develop "eHi" as a trusted brand. From time to time, our customers express dissatisfaction with our services, including those related to the availability, condition and reservation time of our vehicles, and our response time to customers' questions or vehicle incidents. To the extent dissatisfaction with our services is widespread or not adequately addressed, our reputation could be harmed, our efforts to develop "eHi" as a trusted brand and to provide enhanced customer experience would be adversely impacted, which may in turn adversely affect our operating results and our ability to attract new customers and retain existing customers.

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        In addition, any negative publicity, regardless of its veracity, could harm our brand image and reputation. Furthermore, pursuant to the global affiliation agreement we entered into with Enterprise China, our signage and logo are displayed alongside the signage and logos of certain subsidiaries of Enterprise, including "Enterprise," "Enterprise-Rent-A-Car," "Alamo," "Alamo Rent A Car," "National" and "National Rent A Car," in several cities in China and certain major North American gateway airports. Any negative publicity involving such brands or deterioration in the quality of services provided by these subsidiaries of Enterprise may also harm our brand image.

Customer violation of traffic rules could result in suspension of some of our vehicles from operation and we may not be able to fully recover the fines arising from our customers' violations.

        China operates a "traffic points" system under which each driver is allotted 12 points for each calendar year. Traffic violations are penalized through, among other things, fines and deduction of the traffic points. For traffic violations caught by law enforcement officers, the point deduction is imposed on the driver. For traffic violations caught by automated traffic enforcement systems, for example, running a red light that was recorded by a traffic camera, the point deduction is imposed on the vehicle.

        Vehicles in use for less than five years in China used to be subject to mandatory biennial inspection by transportation authorities. Such rules were changed by the Opinion regarding Strengthening and Improving the Inspection Work of Automobile Vehicles, or the Inspection Work Opinion, issued in May 2014. According to the Inspection Work Opinion, starting from September 1, 2014, non-operational cars and other small-size, mini-type passenger vehicles which are registered for less than six years are exempted for vehicle inspections, and such vehicles which are registered for more than six years (including six years) are still subject to vehicle inspections. For a vehicle to pass the inspection, all point deductions recorded on the vehicle must be offset by applying the drivers' available points.

        Some of our vehicles have point deductions recorded on them due to customer traffic violations caught by automated traffic enforcement systems. For our vehicles to pass their mandatory biennial inspection, we coordinate with our customers who committed the traffic violations to offset the point deductions recorded on our vehicles by applying their available points. However, depending on the volume of vehicles due for inspection and the time required to coordinate with our customers, we sometimes were unable to timely offset all the point deductions on our vehicles before their inspection dates, and may be unable to do so in the future. If we fail to promptly offset the point deductions recorded on our vehicles, our vehicles will not be able to pass the inspection and will be suspended from road use and disposition until all points deductions are offset, which may materially and adversely affect our business, results of operation and financial condition. Historically, the number of our vehicles that did not pass the mandatory vehicle inspection was minimal.

        In addition, while we obtain pre-authorized credit card payments when our car rental customers pick up or return the rental vehicles, such pre-authorized payments may not be sufficient to cover fines arising from such customers' traffic violations. In the event that traffic fines exceed the pre-authorized payment amount, we may not be able to fully recover outstanding balances from such customers in time or at all, which may materially and adversely affect our business, results of operation and financial condition.

If we fail to protect our customers' confidential information stored in our systems, our reputation or brand may be harmed, and we may be exposed to liability and loss of customers.

        Our reservation system stores, processes and transmits our customers' confidential information, including identity information, driver's license numbers, contact information and other sensitive data. We rely on encryption, authentication and other technologies, as well as administrative and physical

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safeguards, to secure such confidential information. Any compromise of our information security could damage our reputation and brand and expose us to risks of costly litigation and liability that could materially harm our business and operating results. We and our third-party data center facilities may not have adequately assessed the internal and external risks posed to the security of our systems and information and may not have implemented adequate preventative safeguards or take adequate reactionary measures in the event of a security incident. Any failure to protect such confidential information could harm our reputation and brand and expose us to liability and loss of customers.

We rely on third-party service providers for certain aspects of our business.

        We depend on third-party service providers for certain aspects of our business. For example, we rely on third parties to complement our coverage for chauffeured car services in certain cities, implement and maintain certain aspects of our technology system, and supplement our vehicle repair and maintenance capabilities. Although we actively monitor the operations of these third-party service providers, and under certain circumstances have the ability to terminate their services for failure to adhere to contracted operational standards, we are unlikely to detect all the problems. If these third-party service providers do not provide adequate services to our customers or us, we have to seek to replace such service providers or remedy the inadequate services, and our reputation, brand image and our business could be materially adversely affected. We may also be held responsible for actions or non-actions of such third parties, which may expose us to possible liabilities.

Restrictive covenants contained in credit facilities may limit our ability to incur additional indebtedness and restrict our future operations, and failure to comply with these restrictive covenants may adversely affect our liquidity, financial condition and result of operations.

        We are subject to restrictive covenants under our credit facilities with banks and third-party financing companies. These restrictive covenants include, among other things, financial covenants such as maintaining our shareholding structure, limitations on our ability to incur additional indebtedness or create new mortgages or charges, making timely reports, restrictions on the use of proceeds and asset sales, and requirements to provide notice or obtain consent for certain significant corporate events. In addition, as part of our financing arrangements entered into with several third-party financing companies, we pledged some of our vehicles as well as 20.73% and 100% of the equity interest in two of our PRC operating subsidiaries to such third-party financing companies, and agreed not to dispose of these collaterals during the term of such financing arrangements.

        Failure to meet any of these financial covenants or any other restrictive covenants in the future may entitle lenders to declare all outstanding borrowing and accrued and unpaid interest to be immediately due and payable and requires us to pay accrued and unpaid interest at higher interest rates. Furthermore, any event or default or acceleration of payment in a credit facility may trigger cross-default or cross acceleration provisions in other credit facilities. If lenders accelerate the repayment of our borrowings, we may not have sufficient cash to timely repay the borrowings and any repayment may disrupt our cash flow and liquidity plans. Additionally, we have provided collaterals under certain credit facilities. If we cannot repay these borrowings, lenders may take ownership of other collaterals granted to them or choose to enforce their security rights thereunder. As a result, we may lose access to our assets as collaterals and be unable to engage in certain business activities or finance future operations or capital needs, and our business, financial condition and results of operations would be materially and adversely affected.

Shortage in vehicle supply or failure to pass on increased vehicle acquisition costs to customers may adversely affect our business and results of operations.

        As of June 30, 2014, approximately 83.7% of the vehicles acquired by us were purchased through dealers of Volkswagen, General Motors/Buick, Honda, Citroen, Chevrolet and Ford vehicles located in

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China. We may experience a shortage in the supply of certain vehicle models in the future. For example, if any supplier is unwilling or unable to provide us with vehicles in required quantities or to deliver vehicles on time, we may not be able to find alternative sources on satisfactory terms in a timely manner, or at all. If any shortage in vehicle supply occurs, our business and results of operations may be materially adversely affected.

        In addition, we may face risks of increased vehicle acquisition costs, which may correlate with rising commodity and structural costs. Our average vehicle acquisition cost is also affected by other factors such as vehicle purchase tax and the mix of economy and premium vehicle models that we purchase. We generally do not enter into long-term contracts with our vehicle suppliers. If our suppliers do not offer us competitive prices and we are not able to purchase sufficient quantities of vehicles from alternative sources at commercially reasonable prices, or at all, we may be forced to purchase vehicles at higher prices and our vehicle acquisition costs may increase significantly. We cannot assure you that we will be able to pass on increased vehicle acquisition costs to our customers. Failure to pass on significant cost increases to our customers may have a material adverse effect on our business, results of operations and financial condition.

If any of our major vehicle suppliers encounter serious vehicle recall problems, our fleet size may be reduced for a certain period and our clients' trust in the quality and safety of our fleet may be adversely affected.

        Our vehicles may be subject to safety recalls by their manufacturers. Under certain circumstances, the recalls may cause retrieval of rented vehicles or temporary decline of reservations. If a large number of vehicles are the subject of simultaneous recalls, or if replacement parts needed are not in adequate supply, we may not be able to use the recalled vehicles for an extended period of time. Those types of disruptions could jeopardize our ability to fulfill existing contractual commitments and/or satisfy demand for our cars and car services, and result in the loss of business to our competitors. We could also face liability claims from our customers related to our vehicles subject to a safety recall. Depending on the severity of the recall, it could materially adversely affect our results of operations and adversely impair our customers' trust in the quality and safety of our fleet.

If property rental costs, including rentals for parking spaces, increase significantly in the cities we currently have operations or we are unable to find suitable locations to expand our service network at a reasonable cost, our results of operations will be materially adversely impacted.

        We plan to open more service locations in markets where we have a presence and to expand into additional cities in China to further grow our business. To operate our business, we need to rent offices, service locations and parking spaces for our staff and vehicles at convenient locations. We may not be successful in identifying and leasing additional properties and parking spaces at desirable locations and on commercially reasonable terms, or at all. In addition, we may not be able to renew our current lease agreements after expiration or secure replacement properties or parking spaces with reasonably commercial terms, or at all. In such cases, our ability to execute our growth strategy could be impaired and our business, results of operations and prospects may be materially adversely affected. Furthermore, if property rental costs increase significantly, in particular for parking spaces, our results of operations may be materially adversely affected.

We depend on key and highly skilled personnel to operate our business, and if we are unable to retain our current personnel or hire additional personnel compatible to our expansion size, our ability to successfully develop and market our business could be harmed.

        Our managerial and other employees operate our service locations and interact with our customers on a daily basis and are critical to maintaining our consistent and high-quality services, as well as our established brand and reputation. We aim to recruit, train and retain skilled and motivated customer oriented managerial and other employees. We need to recruit and train qualified managerial and other

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employees on a timely basis to keep pace with our rapid growth. There may be a limited supply of such qualified individuals in some markets in China where we have operations and cities into which we intend to expand. We also need to provide continuous training to our managerial and other employees so that they can stay abreast of changes in our operations and consumer preferences and demands, and meet and implement our quality standards. If we fail to recruit, train and retain qualified managerial and other employees, our service quality may decrease, which in turn may have a material and adverse effect on our brand, our business, and our financial condition and results of operations.

        Our success significantly depends upon the continuing service of our senior management team, including Mr. Ray Ruiping Zhang, our founder, chairman and chief executive officer, Dr. Leo Lihong Cai, our director and senior and executive vice president of sales and marketing, Mr. Colin Chitnim Sung, our chief financial officer and Mr. Chun Xie, our chief information officer. We rely on our management team's experience in business operations, their business vision, management skills and working relationships with our employees, customers, suppliers, third-party service providers and other business partners to execute our business strategies and to achieve our business objectives. In addition, our ability to attract and retain key personnel is a critical aspect of our competitiveness. If one or more members of our senior management team or other key employees are unable or unwilling to continue in their present position, we may not be able to replace them easily, or at all. As a result, our business could be severely disrupted and our financial condition and results of operations could be materially adversely affected.

If the average salary or statutory welfare expenses of our employees increase significantly, our profitability may be materially adversely impacted.

        As of June 30, 2014, we had 2,816 full-time and 515 part-time employees. We believe we will continue to hire additional employees to keep in line with our expansion.

        China has recently experienced a significant increase in employment compensation levels. From 2011 to 2013, the annual average wages in China increased by 7.6% from RMB42,452 to RMB45,676, according to National Bureau of Statistics of China. During the same period, the average salary and welfare expenses of our employees of similar positions increased by approximately 14.9%. If the average salary of our employees increases significantly, our profitability may be materially adversely impacted. In addition, under various PRC labor-related laws, rules and regulations, employers are required to contribute, on behalf of their employees, to a number of social security funds, including funds for basic pension insurance, unemployment insurance, basic medical insurance, work-related injury insurance, maternity leave insurance, and housing accumulation funds. The relevant government agencies may examine whether an employer has made adequate payments of the requisite statutory employee benefits, and those employers who fail to make adequate payments may be subject to late payment fees, fines and/or other penalties. If the relevant PRC authorities determine that we shall make supplemental social insurance and housing fund contributions and/or that we are subject to fines and legal sanctions, our business, financial condition and results of operations may be adversely affected.

Significant increases in fuel costs or limitations in fuel supplies could seriously harm our business.

        We are generally responsible for fuel costs and supplies when providing chauffeured car services. While customers using our car rental services are typically responsible for the costs of fuel during the rental term, any increase in fuel costs or limitation in fuel supplies may discourage them from renting vehicles from us. Fuel prices in China increased significantly in 2012 and 2013, which has increased our vehicle operating expenses. Continued significant increases in fuel prices or a severe or protracted disruption of fuel supplies could have a material adverse effect on our financial condition and results of operations.

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We face risks related to liabilities resulting from the use of our vehicles by our customers.

        We are exposed to claims for personal injury or death and property damage as a result of automobile accidents involving vehicles driven by our customers or chauffeured car services provided by our drivers or third party service providers outsourced by us. We depend on our staff, customers and, in some cases, third party operators, for pre-rental inspections in order to identify any apparent or potential damage or safety concerns with the vehicles. However, if a customer uses a car that has worn tires or some mechanical or other problem, including a manufacturing defect, which contributed to a motor vehicle accident that results in a death or property damage, we may still be a defendant of the claims for the alleged liabilities of the accident and the damage resulting from it. Furthermore, according to the PRC Torts Law, when the driver of a rental car who is not the owner of the vehicle is held liable for a traffic accident, liability will first be covered by the insurance company providing the compulsory traffic accident insurance of the vehicle, and the driver shall be responsible for the portion not covered by the compulsory traffic accident insurance. However, since judicial proceedings determining the cause of a motor vehicle accident can be lengthy and costly, and the results of such proceedings may be uncertain, we may not be successful in defending ourselves each time such an incident occurs. If a significant number of such claims cannot be resolved, our reputation could suffer.

We could be negatively affected if our insurance coverage proves to be limited or inadequate.

        We may suffer from insufficient insurance coverage for our vehicles or liabilities resulting from our operations. We bear the risk of damage to or losses of our vehicles, including those caused by accident, theft or natural disaster. We are also exposed to claims for personal injury or death and property damage as a result of automobile accidents involving vehicles driven by our customers or chauffeured car services provided by our drivers or third party service providers outsourced by us. We maintain motor vehicle damage insurance, third-party liability insurance, compulsory traffic accident insurance and other insurance coverage, although there can be no assurance that such coverage will be sufficient or adequate. Furthermore, due to the large volume and broad geographic coverage and rapid growth of our fleet, we may fail to renew our insurance policies on a timely basis although we have not experienced any failure or material delay in renewing our insurance policies as of the date of this prospectus. A successful claim against us beyond the scope or limit of our or our third party service provider's insurance coverage may have a material adverse effect on our business, financial condition and/or results of operations. In addition, uninsured claims filed against us or the inability of our insurers to pay otherwise-insured claims would have an adverse effect on our financial condition. Moreover, if the insurance premiums we pay to the insurance companies increases significantly, our results of operations would be materially adversely affected.

        In addition, we face risks and contingent losses resulting from car theft. We equip all of our vehicles with GPS-based tracking devices that monitor the precise location of the vehicles at all times, and a significant majority of such devices are covered by GPS product liability insurance. However, sophisticated thieves could locate and disable such devices, which may lead to an increase in our lost vehicles from car theft. Since our inception in 2006, we had written off a total of 127 vehicles as of June 30, 2014 as a result of car theft and other reasons. As we have not maintained any robbery or theft insurance for our vehicles, such losses may not be sufficiently covered by the GPS product liability insurance, which may adversely affect our results of operations.

Future acquisitions could prove difficult to integrate or disrupt our business and lower our operating results.

        Our growth strategy may involve the acquisition of businesses and/or entities, or entering into strategic partnerships or alliances in areas in which we do not currently operate or have sufficient capacity to operate. For example, we made a strategic investment in Travice Inc., which develops and

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operates the Kuaidi mobile taxi and car calling service provider in April 2014. Our future strategic investments and acquisitions may expose us to potential risks, including risks associated with:

    fluctuations in our future financial results, such as potential decrease in our margins and profitability;

    integration of new operations, services and personnel;

    exposure to unforeseen or hidden liabilities;

    diversion of resources from our existing businesses and technologies;

    our failure to generate sufficient revenues to offset the costs of acquisitions; and

    potential loss of, or harm to, relationships with suppliers, clients or employees.

        If any of these happens, it may have a material adverse effect on our ability to manage our business or otherwise have a material adverse effect on our business, financial condition or results of operations.

We may be exposed to intellectual property infringement and other claims, which could be time-consuming or costly to defend and may result in substantial damages.

        Our success depends on our ability to use and develop our proprietary, comprehensive suite of technology systems, and our other intellectual property rights. We may face challenges to our intellectual property rights and be subject to claims that we have infringed on third parties' intellectual property rights. The validity and scope of claims relating to our proprietary technologies or other intellectual property rights may involve complex scientific, legal and factual questions and analysis, and therefore the outcomes may be highly uncertain. The defense and prosecution of intellectual property suits and related legal and administrative proceedings may be costly and may significantly divert the attention and resources of our personnel. An adverse determination in any such litigation or proceedings to which we may become a party may subject us to significant liability, require us to seek licenses from third parties, pay royalties or subject us to injunctions prohibiting the use of the relevant intellectual property rights.

        We have entered into a global affiliation agreement with Enterprise China in connection with our Series D private placement with Crawford, the parent company of Enterprise Holdings. Under this agreement which Enterprise China, its affiliate, Enterprise Holdings and their affiliates, or collectively Enterprise, have granted us, in certain designated region, a royalty free license with the right to sublicense certain of their trademarks, service marks, trade names, signage and logos, symbols and designs associated with the names "Enterprise," "Enterprise-Rent-A-Car," "Alamo," "Alamo Rent A Car," "National" and "National Rent A Car" for the purpose of pursuing business referrals between Enterprise and us, processing such referrals and servicing business referred to us by Enterprise. If we or any of our sublicensees use these licensed intellectual properties improperly or outside the scope of the license granted to us, we may be subject to claims of trademark or other intellectual property infringement by Enterprise. In the case that Enterprise does not have all the requisite rights to grant us an exclusive license to use such marks, we may be subject to claims of trademark or other intellectual property infringement by the rightful owners of these marks for using these intellectual property rights for unauthorized using these intellectual property rights. Any resulting litigation may be time-consuming and costly, with inherent uncertainty as to the outcome. If these owners successfully assert a claim for intellectual property infringement against us, the liability may adversely impact our business, financial condition and results of operations.

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Failure to adequately protect our intellectual property rights could substantially harm our brand, our business and results of operations.

        We believe our brand, trademarks, software copyrights, trade secrets and other intellectual property rights are critical to our success. Any unauthorized use of our intellectual property rights could harm our competitive advantage and business. We have granted Enterprise, in certain designated region, a royalty free license with the right to sublicense certain of our trademarks, service marks, trade names, signage and logos, symbols and designs associated with the name "eHi" for the purpose of pursuing business referrals between Enterprise and us, processing such referrals and servicing business referred to Enterprise by us. If Enterprise or any of its sublicensees uses these licensed intellectual properties improperly or outside the scope of our license, our brand and intellectual property rights may be harmed. Our efforts in protecting our brand and intellectual property rights may not always be effective. We regularly file applications to register our trademarks in China, but may not be able to register such trademarks, or register them within the categories we seek. Similar trademarks registered under other different categories may dilute our brand and image. Historically, China has not protected intellectual property rights to the same extent as the United States, and infringement of intellectual property rights continues to pose a serious risk in doing business in China. Monitoring and preventing unauthorized use is difficult. The measures we take to protect our intellectual property rights may not be adequate or sufficient. As the right to use Internet domain names is not rigorously regulated in China, other companies may have incorporated in their domain names elements similar in writing or pronunciation to our trademarks and domain names. We have also entered into confidentiality and non-compete agreements with our key employees that prohibit them from disclosing confidential information. However, these agreements may not effectively prevent unauthorized disclosure of confidential information and it may be difficult or expensive for us to enforce these agreements. Our business may be materially adversely affected if we fail to adequately or sufficiently protect our brand, trademarks, copyrights, trade secrets and our other intellectual property rights.

We have granted, and may continue to grant, employee share options, restricted shares or other equity incentives in the future, which may result in increased share-based compensation expenses and adversely affect our results of operations.

        We adopted the 2010 Plan in April 2010, which was amended and restated in December 2010 and August 2014. In October 2014, we adopted the 2014 Plan, which will be conditional on and effective upon completion of this offering. We are required to account for share-based compensation as an expense based on the grant date fair value of share options, restricted shares or other equity incentives to employees with the compensation expense recognized over the period in which the recipient is required to provide service in exchange for the equity award. As of the date of this prospectus, a total of 5,143,150 options and 450,000 issued but not fully vested restricted shares granted under the 2010 Plan are outstanding. If we grant more options, restricted shares or other equity incentives, we could incur significant compensation charges and our results of operations could be adversely affected. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical accounting policies" and Note 2 to our consolidated financial statements included in this prospectus for a more detailed presentation of accounting for our share-based compensation.

An economic downturn could result in a decline in business and leisure travel activities, which could materially adversely affect our business.

        Our results of operations are affected by many economic factors, including the level of economic activity in the car rental and car service industry in China. Any actual or perceived threat of a financial crisis in China could have an adverse impact on the car rental and car service industry, including a tightening of the credit markets, reduced business and leisure travels, reduced customer spending and volatile fuel prices. According to the National Bureau of Statistics of China, in the first quarter of 2014,

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China's GDP growth rate was 7.4%, which was the lowest since 2009. Any prolonged slowdown in China's economy might lead to tightened credit market, increased market volatility, sudden drops in business and consumer confidence and dramatic changes in business and consumer behaviors. In response to their perceived uncertainty in economic conditions, our customers may also delay, reduce or cancel their travel activities. To the extent any fluctuations in the Chinese economy significantly affect our customers' demand for our services or change their spending habits, our results of operations may be materially adversely affected.

Disputes with our strategic partners may arise during our cooperation with such partners, which may result in indemnification or other claims against us and/or termination of the cooperation and have an adverse impact on our business, results of operations and prospects.

        We have entered into strategic partnerships with two leading travel service providers, Enterprise and Ctrip. We are the designated and preferred business partner of Ctrip in providing car rental services and Ctrip integrated access to our online reservation system in its Ctrip Travel mobile application in June 2014 as part of our cooperation. In addition, our global affiliation agreement with Enterprise China, entered into in March 2012, provides a wide range of arrangements, including rental referrals and trademark licensing. In performing the obligations under these cooperations, disputes may arise with respect to matters such as the improper use of the relevant licensed intellectual property rights, non-compliance of performance standards, non-competition, resolutions of customer complaints, and reimbursement of expenses relating to rental referrals. We and our strategic partners may have different interpretations of certain contractual provisions in relevant agreement, in particular, the various provisions in these agreements that require, for instance, "reasonable efforts" in rental referrals and "commercially reasonable efforts" to facilitate and support the other party's marketing activities. Our failure to resolve these disputes may subject us to indemnification or other claims from our strategic partners. In addition, our strategic partners may terminate these cooperation arrangements if we commit a material breach of relevant agreement or certain provisions set out in our Series D and Series E share purchase agreements and the investors' rights agreement if such breach is not curable or is not cured within a specified period. Such claims and/or termination of these agreements may adversely affect our business, results of operations and prospects.

We face risks related to natural disasters and health epidemics in China, which may materially adversely affect our business and results of operations.

        Our business may be materially adversely affected by natural disasters or the outbreak of health epidemics in China. For example, in May 2008, Sichuan Province suffered a strong earthquake measuring approximately 8.0 on the Richter scale, and in April 14, 2010, another severe earthquake measuring approximately 7.1 hit part of Qinghai province in western China, each of which caused widespread damage and casualties. In addition, in the last decade, China has suffered health epidemics related to the outbreak of avian influenza (including H1N1 and H7N9 subtypes) and severe acute respiratory syndrome, or SARS. If such health epidemics become widespread in China or increase in severity, it may have an adverse effect on economic activities in China, with the potential to severely disrupt our business operations and harm our results of operations. Any future natural disasters or health epidemics in the PRC may also materially adversely affect our business and results of operations. In addition, unfavorable developments in domestic and international politics, including military conflicts, political turmoil and social instability, may also adversely affect consumer confidence and reduce customer spending, which could in turn materially and adversely affect our growth and profitability.

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In preparing our consolidated financial statements, we have identified material weaknesses and other control deficiencies in our internal control over financial reporting. If we fail to maintain an effective system of internal control over financial reporting, we may be unable to accurately report our financial results or prevent fraud, and investor confidence in our company and the market price of our ADSs may be adversely affected.

        We will be subject to reporting obligations under the U.S. securities laws after this offering. Our reporting obligations as a public company will place a significant strain on our management, operational and financial resources and systems for the foreseeable future. Prior to this offering, we have been a private company and have had limited accounting personnel and other resources with which to address our internal control over financial reporting. Our independent registered public accounting firm has not conducted an audit of our internal control over financial reporting. In connection with the audit of our consolidated financial statements as of and for the years ended December 31, 2012 and 2013, we and our independent registered public accounting firm identified two material weaknesses and other control deficiencies, each as defined in the standards established by the U.S. Public Company Accounting Oversight Board, or the PCAOB, in our internal control over financial reporting as of December 31, 2013. As defined in the standards established by the PCAOB, a "material weakness" is a significant deficiency, or combination of significant deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. A significant deficiency is a control deficiency, or a combination of control deficiencies, that adversely affects our ability to initiate, authorize, record, process, or report external financial data reliably in accordance with U.S. GAAP such that there is more than a remote likelihood that a misstatement of our financial statements that is more than inconsequential will not be prevented or detected by our employees.

        The material weaknesses identified related to insufficient accounting resources and expertise necessary to comply with the U.S. GAAP and lack of sufficient and documented financial closing policies and procedures, specifically those related to period end cut-off, accounts classification and presentation. Neither we nor our independent registered public accounting firm undertook a comprehensive assessment of our internal control for purposes of identifying and reporting material weaknesses and other control deficiencies in our internal control over financial reporting. In light of the material weaknesses and control deficiencies that were identified as a result of the limited procedures performed, we believe it is possible that, had we performed a formal assessment of our internal control over financial reporting or had our independent registered public accounting firm performed an audit of our internal control over financial reporting, additional material weaknesses and control deficiencies may have been identified.

        Following the identification of the material weaknesses and other control deficiencies, we have taken measures and plan to continue to take measures to remedy these material weaknesses and control deficiencies. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Internal control over financial reporting" for our remedies to the material weaknesses and control deficiencies. However, the implementation of these measures may not fully address these deficiencies in our internal control over financial reporting, and we cannot conclude that they have been fully remedied. Our failure to correct these material weaknesses and control deficiencies or our failure to discover and address any other material weaknesses and control deficiencies could result in inaccuracies in our financial statements and could also impair our ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis. As a result, our business, financial condition, results of operations and prospects, as well as the trading price of our ADSs, may be materially and adversely affected. Moreover, ineffective internal control over financial reporting significantly hinders our ability to prevent fraud.

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        Upon completion of this offering, we will become subject to the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act, or Section 404, will require that we include a report from management on the effectiveness of our internal control over financial reporting in our annual report on Form 20-F beginning with our annual report for the fiscal year ending December 31, 2015. If we fail to remedy the material weaknesses and control deficiencies identified above, our management may conclude that our internal control over financial reporting is not effective. This may adversely impact the market price of our ADSs due to a loss of investor confidence in the reliability of our reporting processes. We will need to incur costs and use management and other resources in order to comply with Section 404.

Our auditor, like other independent registered public accounting firms operating in China, is not permitted to be subject to inspection by the Public Company Accounting Oversight Board and, as such, investors may be deprived of the benefits of such inspection.

        Our independent registered public accounting firm that issued the audit reports included in this prospectus filed with the SEC, as an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is required by the laws of the United States to undergo regular inspections by the PCAOB to assess its compliance with the laws of the United States and professional standards. Because our auditor is located in China, a jurisdiction where the PCAOB is currently unable to conduct inspections without the approval of the PRC authorities, our auditor, like other independent registered public accounting firms operating in China, is currently not inspected by the PCAOB.

        Inspections of other firms that the PCAOB has conducted outside of China have identified deficiencies in those firms' audit procedures and quality control procedures, which may be addressed as part of the inspection process to improve future audit quality. The inability of the PCAOB to conduct inspections of independent registered public accounting firms operating in China makes it more difficult to evaluate the effectiveness of our auditor's audit procedures or quality control procedures. As a result, investors may be deprived of the benefits of PCAOB inspections and lose confidence in our reported financial information and procedures and the quality of our financial statements.

Proceedings instituted recently by the SEC against five PRC-based accounting firms, including our independent registered public accounting firm, could result in financial statements being determined to not be in compliance with the requirements of the Exchange Act.

        In December 2012, the SEC instituted administrative proceedings under Rule 102(e)(1)(iii) of the SEC's Rules of Practice against five PRC-based accounting firms, including our independent registered public accounting firm, alleging that these firms had violated U.S. securities laws and the SEC's rules and regulations thereunder by failing to provide to the SEC the firms' work papers related to their audits of certain PRC-based companies that are publicly traded in the United States. Rule 102(e)(1)(iii) authorizes the SEC to deny any person, temporarily or permanently, the ability to practice before the SEC if found by the SEC, after notice and opportunity for a hearing, to have willfully violated any such laws or rules and regulations.

        On January 22, 2014, an administrative law judge in the SEC issued an initial decision sanctioning four of these accounting firms from practicing before the SEC for six months. These four accounting firms appealed the initial administrative law decision to the SEC. The initial administrative law decision will not become effective until and unless it is endorsed by the commissioners of the SEC. If the SEC's final decision is decided against the accounting firms, the accounting firms can then further appeal the final decision in the federal appellate courts.

        While we cannot predict the outcome of these proceedings, if the accounting firms, including our independent registered public accounting firm, were denied, even temporarily, the ability to practice before the SEC, and we are unable to timely find another registered public accounting firm which can

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audit and issue a report on our financial statements, our financial statements could be determined to not be in compliance with the requirements for financial statements in connection with this offering under the Securities Act of 1933, as amended, or the Securities Act, or we may not be able to meet the reporting requirements under the Exchange Act after our completion of this offering. Such a determination could ultimately lead to the delay or abandonment of this offering, or, after completion of this offering, delisting of our ADSs from NYSE or deregistration from the SEC, or both, which would substantially reduce or effectively terminate the trading of our ADSs in the United States, result in a sharp decline of our market capitalization and materially and adversely affect the value of your investment in our ADSs.

We are an "emerging growth company" within the meaning of the Securities Act and may take advantage of certain reduced reporting requirements.

        We are a "foreign private issuer," as such term is defined in Rule 405 under the Securities Act, and are not required to comply with certain periodic disclosure and current reporting requirements of the Exchange Act. In addition, we are an "emerging growth company," pursuant to the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies" including, most significantly, not being required to comply with the auditor attestation requirements of Section 404 for so long as we are an emerging growth company until the fifth anniversary from the date of our initial offering. We intend to rely on the exemption from auditor attestation requirement under Section 404.

        The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards. We have elected to "opt out" of this provision and, as a result, we will comply with new or revised accounting standards as required when they are adopted for public companies. This decision to opt out of the extended transition period under the JOBS Act is irrevocable.

We will incur increased costs as a result of being a public company, particularly after we cease to qualify as an "emerging growth company."

        Upon completion of this offering, we will become a public company and expect to incur significant legal, accounting and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC and the NYSE, impose various requirements on the corporate governance practices of public companies.

        We expect these rules and regulations to increase our legal and financial compliance costs and to make some corporate activities more time-consuming and costly. In particular, as an emerging growth company, we intent to rely on certain exemptions from various reporting requirements that are applicable generally to public companies. After we are no longer an "emerging growth company," we expect to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 and the other rules and regulations of the SEC. For example, as a result of becoming a public company, we will need to increase the number of independent directors and adopt policies regarding internal controls and disclosure controls and procedures. We also expect that operating as a public company will make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. In addition, we will incur additional costs associated with our public company reporting requirements. It may also be more difficult for us to find qualified persons to serve on our board of directors or as executive officers. We are currently evaluating and monitoring developments with respect to these rules and regulations, and we cannot predict or estimate with any degree of certainty the amount of additional costs we may incur or the timing of such costs.

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        In the past, shareholders of a public company often brought securities class action suits against the company following periods of instability in the market price of that company's securities. If we were involved in a class action suit, it could divert a significant amount of our management's attention and other resources from our business and operations, which could harm our results of operations and require us to incur significant expenses to defend the suit. Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations.

Risks related to doing business in China

Adverse changes in economic and political policies of the PRC government could have a material adverse effect on the overall economic growth of China, which could materially and adversely affect our business.

        All of our business operations are conducted in China. As the car rental and car service industry is highly sensitive to business and personal discretionary spending levels, it tends to decline during periods of general economic downturn. If China's car rental and car service industry fails to grow as fast as it is forecasted, our focused car rentals and car services business will also be adversely affected. Accordingly, our business, results of operations, financial condition and prospects are subject to a significant degree to economic, political and legal developments in China. Although the Chinese economy is no longer a planned economy, the PRC government continues to exercise significant control over China's economic growth through direct allocation of resources, monetary and tax policies, and other government policies such as those that encourage or restrict investment in certain industries by foreign investors, control the exchange between Renminbi and foreign currencies, and regulate the growth of the general or a specific market. This government involvement has been instrumental in China's significant growth in the past 30 years. The PRC government has adopted policies aimed at stimulating the economic growth in China. If the PRC government's current or future policies fail to help the Chinese economy achieve further growth or if any aspect of the PRC government's policies, such as measures related to the car rental and car service industry or on interest rate and tax regulations, limits the growth of the car rental and car service industry in China, our business, growth rate, strategies or results of operations could be materially and adversely affected.

Uncertainties with respect to the PRC legal system could adversely affect us.

        We conduct our business primarily through our subsidiaries in China. Our operations in China are governed by the PRC laws and regulations. The PRC legal system is based on statutes. Prior court decisions may be cited for reference but have limited precedential value.

        Since 1979, PRC legislation and regulations have significantly enhanced the protections afforded to various forms of foreign investments in China. However, China has not developed a fully integrated legal system and recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in China. In particular, because these laws and regulations are relatively new, and because of the limited volume of published decisions and their nonbinding nature, the interpretation and enforcement of these laws and regulations involve uncertainties. In addition, the PRC legal system is based in part on government policies and internal rules (some of which are not published on a timely basis or at all) that may have a retroactive effect. As a result, we may not be aware of our violation of these policies and rules until some time after the violation. Furthermore, intellectual property rights, trade mark and confidentiality protections in China may not be as effective as in the United States or other countries. We cannot predict the effect of future developments in the PRC legal system, including the promulgation of new laws, changes to existing laws or the interpretation or enforcement thereof, or the preemption of local regulations by national laws. These uncertainties could limit the legal protections available to us and other foreign investors, including you. In addition, any litigation in China may be protracted and result in substantial costs and diversion of resources and management attention.

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Failure in obtaining all of the requisite permits, licenses or making all of the requisite filings or registrations or meeting other regulatory requirements for operating car rentals and car services business in China by us or any third-party service provider who cooperates with us may subject us to fines or other administrative actions.

        As a car rentals and car services provider in China, we are subject to a number of permit, license, filing and other regulatory requirements for the car rentals and car services business. As the car rental and car service industry is at an early stage of development in China, the legislations continue to evolve and there are currently no national laws or regulations specifically regulating the car rental and car service industry except for the Notice on Promoting the Healthy Development of Car Rental Industry, or the 2011 MOT Notice, promulgated in April 2011 by the Ministry of Transport, or the MOT, which only sets forth certain general guidelines for the emerging car rental industry in China. See "Regulations—Regulations on car rental and car service industry." The car rental and car service industry is mainly regulated by government authorities at local levels, which impose various regulatory requirements on the operating entities, vehicles or drivers, and such regulatory requirements vary from one place to another. The practice of local authorities may also deviate from the existing local rules. Some local authorities do not accept or process applications for certain permits, licenses or filings as required under the local rules. Furthermore, due to the unclear regulatory boundaries between car rentals or car services business and road transportation businesses or taxi businesses, although we do not believe any of our operating subsidiaries is a road passenger transportation service provider or a taxi service provider as our services are characterized by distinctive features, we cannot assure you that the government authorities take the same view as ours or will not change their views in the future.

        According to the 2011 MOT Notice, a car rental company must obtain appropriate approval before it may conduct road passenger transportation business. However, the 2011 MOT Notice does not define the term "road passenger transportation business." Furthermore, some local rules explicitly restrict a car rental company from concurrently providing chauffeur services and car rental services through the same entity. In August 2011, Shanghai Municipal Transport and Port Authority issued Certain Opinions on Standardizing the Regulation of Car Rental Industry, which provides that car rental companies shall not provide drivers for the vehicles they rent but may at the requests of their customers sign service agent contracts on behalf of their customers with third-party labor service companies, under which the labor service companies may provide drivers to car rental customers. See "Regulations—Regulations on car rental and car service industry." We currently provide chauffeured car services primarily to our corporate clients and generally enter into long-term framework agreements with these corporate clients, pursuant to which our vehicles and chauffeur services are provided by different subsidiaries under separate contracts. Our PRC counsel, Grandall Law Firm (Shanghai), has advised us that such business arrangements are not in violation of any existing applicable laws, regulations at national level or local rules of cities where we currently provide chauffeured car services in China. However, we cannot assure you that relevant local government authorities will not interpret the laws and regulations differently, find our activities in violation of relevant laws and regulations and impose penalties on us. If the relevant local government authorities is of the view that our business arrangements of chauffeured car services are not in compliance with applicable laws and regulations, we may be subject to fines and other administrative actions in some cities where we have provided such services.

        Furthermore, a company that sets up a branch to conduct business in a location outside its domicile must have such the branch registered with the local counterpart of the State Administration for Industry and Commerce, or SAIC. Please see "Regulations—Regulations on registration of branch companies."

        As a result of the inconsistency in local rules and their interpretation and implementation, as well as fast expansion of our business, we have not obtained, made or timely renewed all of the requisite permits, licenses, filings or registrations for our business operations or fully complied with all other regulatory requirements applicable in the cities in which we currently operate our car rentals and car services business. In addition, we are in the process of renewing permits or licenses of certain

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subsidiaries such as Guangzhou Haida Car Rental Co., Ltd. We cannot assure you that we will obtain or successfully renew all of the requisite permits and/or licenses, make all of the requisite filings or registrations or set up all necessary branches in a timely manner, or comply with all other regulatory requirements in the future. Moreover, we cannot assure you that all the third-party service providers engaged by us have met all such regulatory requirements either, which may subject us to fines and other administrative actions. Government authorities at various levels may promulgate new regulations or rules, or change their interpretation or implementation of existing regulations and rules, which may subject us to new regulatory requirements that we may not be able to meet in a timely manner, or at all.

        As the car rental and car service industry is mainly regulated by government authorities at local levels, penalties arising from failure to obtain or renew any required permits, licenses or filings in a timely manner or at all or comply with any existing or future laws and regulations may be different in different locations, which generally include a fine up to RMB100,000 or up to ten times of the amount of illegal income per violation (depending on the amount of illegal income, if any), confiscation of illegal income, suspension of operations, detention of cars, revocation of the licenses or permits required for business operations. In addition, any business operation by a branch without a valid business license may subject to a fine up to RMB100,000.

Government control over currency conversion may limit our ability to issue dividends to our shareholders in foreign currencies, and may therefore adversely affect the value of your investment.

        The PRC government imposes controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. We receive substantially all of our revenues in Renminbi. Under our current corporate structure, our Cayman Islands holding company may rely on dividend payments from our PRC subsidiaries to fund any cash and financing requirements we may have. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval from the PRC State Administration of Foreign Exchange, or SAFE, by complying with certain procedural requirements. Therefore, our PRC subsidiaries are able to pay dividends in foreign currencies to us without prior approval from SAFE by complying with certain procedural requirements. However, approval from or registration with the appropriate government authorities is required where Renminbi are to be converted into foreign currencies and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC government may also at its discretion restrict access in the future to foreign currencies for current account transactions. If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demands, we may not be able to pay dividends in foreign currencies to our shareholders, including holders of our ADSs.

Fluctuations in exchange rate may have a material adverse effect on our results of operations and the value of your investment.

        We generate substantially all of our revenues and incur substantially all of our expenses in Renminbi. The net proceeds from this offering will be denominated in U.S. dollars. As a result, fluctuations in the exchange rates between the U.S. dollar and Renminbi will affect the relative purchasing power in Renminbi terms of our U.S. dollar assets and the proceeds from this offering. As the functional currency for our operations is Renminbi, fluctuations in the exchange rates may also cause us to incur foreign exchange losses on any foreign currency holdings they may have. In addition, appreciation or depreciation in the value of Renminbi relative to the U.S. dollar would affect our financial results in U.S. dollar terms without giving effect to any underlying change in our business or results of operations. If we decide to convert our Renminbi into U.S. dollars for the purpose of making

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payments for dividends on our ADSs or for other business purposes, appreciation of U.S. dollar against Renminbi would have a negative effect on the U.S. dollar amount available to us.

        The value of Renminbi against U.S. dollars and other currencies is affected by, among other things, changes in China's political and economic conditions and China's foreign exchange policies. In July 2005, the PRC government changed its decade-old policy of pegging the value of Renminbi to U.S. dollars, and Renminbi appreciated more than 20% against U.S. dollars over the following three years. However, the People's Bank of China regularly intervenes in the foreign exchange market to limit fluctuations in Renminbi exchange rates to achieve policy goals. During the period between July 2008 and June 2010, the exchange rates between Renminbi and the U.S. dollars had been stable and traded within a narrow range. However, Renminbi fluctuated significantly during that period against other freely traded currencies, in tandem with U.S. dollars. Since June 2010, Renminbi has started to slowly appreciate against the U.S. dollars, though there have been periods recently when U.S. dollars appreciated against Renminbi. It is difficult to predict how long the current situation may last and when and how the relationship between Renminbi and U.S. dollars may change again.

        There remains significant international pressure on the PRC government to adopt a flexible currency policy. Any significant appreciation or depreciation of Renminbi may materially and adversely affect our revenues, earnings and financial position, and the value of, and any dividends payable on, our ADSs in U.S. dollars. For example, to the extent that we need to convert U.S. dollars we receive from this offering into Renminbi to pay our operating expenses, appreciation of Renminbi against U.S. dollars would have an adverse effect on the Renminbi amount we would receive from the conversion. Conversely, a significant depreciation of Renminbi against the U.S. dollar may significantly reduce the amount of U.S. dollars equivalent of our earnings, which in turn could adversely affect the price of our ADSs.

        Very limited hedging options are available in China to reduce our exposure to exchange rate fluctuations. To date, we have not entered into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to enter into hedging transactions in the future, the availability and effectiveness of these hedges may be limited and we may not be able to adequately hedge our exposure or at all. In addition, our currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert Renminbi into foreign currencies. As a result, fluctuations in exchange rates may have a material adverse effect on your investment.

The approval of the China Securities Regulatory Commission, or the CSRC, may be required in connection with this offering, which may delay or create other uncertainties for this offering.

        In 2006, six PRC regulatory agencies, including the CSRC, jointly adopted the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, which became effective on September 8, 2006 and was amended on June 22, 2009. See "Regulations—Regulations on overseas listing." Under the M&A Rules, the prior approval of the CSRC is required for the overseas listing of offshore special purpose vehicles that are directly or indirectly controlled by the PRC companies or individuals and used for the purpose of listing PRC onshore interests on an overseas stock exchange. The application of the M&A Rules remains unclear. Currently, there is no consensus among the leading PRC law firms regarding the scope and applicability of the CSRC approval requirement. Our PRC counsel, Grandall Law Firm (Shanghai), has advised us that the CSRC approval is not required in the context of this offering and the listing and trading of the ADSs on the NYSE because we are not a special purpose vehicle as defined under the M&A Rules and this regulation does not require an application to be submitted to the CSRC for the approval of the listing and trading of our ADSs on the NYSE. However, we and our PRC counsel cannot assure you that the relevant PRC government agencies, including the CSRC, would reach the same conclusion as our PRC counsel does or would not adopt interpretation or amendment of the M&A Rules, or any new rules, regulations or directives that require us to obtain CSRC approval in the future. If the CSRC or another

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PRC regulatory body subsequently determines that we need to obtain CSRC approval for this offering either by interpretation, clarification or amendment of the M&A Rules or by any new rules, regulations or directives or in any other ways, we may face sanctions by the CSRC or other PRC regulatory agencies. In such event, these regulatory agencies may impose fines and penalties on our operations in the PRC, limit our operations in the PRC, delay or restrict the repatriation of the proceeds from this offering into the PRC or take other actions that could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our ADSs. The CSRC or other PRC regulatory agencies may also take actions requiring us, or making it advisable for us, to halt this offering before settlement and delivery of the ADSs offered hereby.

PRC regulations regarding mergers and acquisitions may make it more difficult for us to make future acquisitions or dispositions of our business operations or assets in China.

        The M&A Rules also established additional procedures and requirements that could make merger and acquisition activities by foreign investors more complex and time-consuming. For example, the Ministry of Commerce, or MOFCOM, shall be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise or a foreign company with substantial PRC operations if certain thresholds under the Provisions on Thresholds for Prior Notification of Concentrations of Undertakings issued by the State Council on August 3, 2008 are triggered. Furthermore, MOFCOM promulgated the Rules of Ministry of Commerce on Implementation of Security Review System of Mergers and Acquisitions of Domestic Enterprises by Foreign Investors in August 2011, or the MOFCOM Security Review Rules, which came into effect on September 1, 2011, to implement the Notice of the General Office of the State Council on Establishing the Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors promulgated on February 3, 2011, or Circular No. 6. According to Circular No. 6, a security review is required for mergers and acquisitions of PRC domestic enterprises by foreign investors (i) having "national defense and security" concerns, and (ii) where the foreign investors may acquire the "de facto control" of the PRC domestic enterprises having national security concerns such as key farm products, key energy and resources, and key infrastructure, transportation, technology and major equipment manufacturing industries. Circular No. 6, however, does not define the term of "key" or "major," nor has it exhausted all the industries that may be deemed as sensitive industries subject to the security review. According to the MOFCOM Security Review Rules, when deciding whether a specific merger or acquisition of a domestic enterprise by foreign investors is subject to the security review by MOFCOM, the principle of "substance over form" should be applied and foreign investors are prohibited from bypassing the security review requirement by structuring transactions through nominee holding structure, trusts, indirect investments, leases, loans, control through contractual arrangements, offshore transactions, or other means. PRC Anti-trust Law also requires certain merger and acquisition transactions be subject to merger control review by MOFCOM, and we may not be able to obtain necessary approval in case of our future merger and acquisitions.

        If we do not seek the necessary approval, we could be subject to administrative fines or other penalties imposed by the relevant PRC authorities. However, because there are not always specific provisions of the fines or penalties for such violations under current PRC laws and regulations, it is uncertain what penalties we may face. In the future, we may grow our business in part by acquiring complementary businesses. Complying with the requirements of the M&A Rules, the MOFCOM Security Review Rules, PRC Anti-trust Law and other related regulations to complete such transactions could be time-consuming and any approval procedures, including obtaining approval from the MOFCOM or its local counterparts, may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or maintain our market share. In addition, such additional procedures and requirements could make it more difficult or time-consuming for us to dispose of any of our business operations or assets in China.

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We may be classified as a "resident enterprise" for PRC enterprise income tax purposes; such classification could result in unfavorable tax consequences to us and our non-PRC shareholders.

        The Enterprise Income Tax Law of the PRC, or the EIT Law, and its Implementing Rules, both of which came into effect on January 1, 2008, provide that enterprises established outside of China whose "de facto management bodies" are located in China are considered PRC "resident enterprises" and will generally be subject to the uniform 25% PRC enterprise income tax rate on their global income. Under the Implementing Rules of the EIT Law, a "de facto management body" is defined as a body that has material and overall management and control over the manufacturing and business operations, personnel and human resources, finances and other assets of an enterprise. In addition, a tax circular issued by the State Administration of Taxation, or the SAT, on April 22, 2009, referred to as Circular 82, provides that certain Chinese-invested enterprises controlled by PRC enterprises or PRC enterprise groups and established outside of China will be classified as resident enterprises only if all the following are located or resident in China: senior management personnel and departments that are responsible for daily production, operation and management; financial and personnel decision making bodies; key properties, accounting books, company seal, and minutes of board meetings and shareholders' meetings; and half or more of the senior management or directors with voting rights. Circular 82 also clarified that dividends and other income paid by such resident enterprises will be considered to be PRC sourced income and subject to PRC enterprise income tax. However, as Circular 82 only applies to enterprises established outside of China that are controlled by PRC enterprises or PRC enterprise groups, it remains unclear how the tax authorities will determine the location of "de facto management bodies" for overseas incorporated enterprises controlled by foreign individuals and entities like us or our offshore subsidiaries. We believe that neither our company nor any of offshore subsidiaries meets all the criteria set forth in Circular 82, because as holding companies, their key assets and records, including board and shareholders resolutions and minutes of board meetings and shareholders meetings, are located and maintained outside the PRC. In addition, we are not aware of any offshore holding company with a corporate structure similar to ours that has been deemed a PRC "resident enterprise" by the PRC tax authorities. Therefore, we believe neither our company nor any of our offshore subsidiaries should be deemed as a "resident enterprise" for PRC tax purposes. However, the tax resident status of our offshore entities is subject to determination by relevant PRC tax authorities and uncertainties remain with respect to their interpretation of the term "de facto management body" as applicable to our offshore entities. We will continue to monitor our tax status. If our company or any of our offshore subsidiaries is considered a "resident enterprise" for PRC enterprise income tax purposes, a number of unfavorable PRC tax consequences could follow. First, our company or any of our offshore subsidiaries will be subject to the uniform 25% enterprise income tax rate on our global income and will have PRC enterprise income tax reporting obligations. Second, although under the EIT Law and its Implementing Rules dividends paid to us from our PRC subsidiaries would qualify as "tax-exempted income", we cannot assure you that such dividends paid to our company or our Hong Kong subsidiaries will not be subject to enterprise income tax because the relevant PRC government authorities have not yet issued guidance with respect to the processing of outbound remittances to overseas incorporated enterprises controlled by foreign individuals and entities like us that are treated as resident enterprises for PRC enterprise income tax purposes. Finally, dividends payable by us to our non-PRC investors or gains from the transfer of our common shares or ADSs may become subject to PRC withholding tax. Failure or delay in fulfilling such tax obligations may cause penalties imposed by PRC tax authorities.

The EIT Law will affect tax exemptions on the dividends we receive and we may not be able to obtain certain treaty benefits on such dividends.

        We are a holding company incorporated under the laws of the Cayman Islands. We conduct substantially all of our business through our PRC subsidiaries and we derive all of our income from these subsidiaries. Prior to January 1, 2008, dividends received by foreign investors from

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foreign-invested enterprises in China were exempted from withholding tax. However, such tax exemption ceased after January 1, 2008 with the effectiveness of the EIT Law and its Implementing Rules, and a withholding tax rate of 10% will apply on such dividends (subject to reductions by the relevant tax treaties or similar tax arrangements, if applicable) except for accumulated and undistributed profit generated by foreign-invested enterprises before January 1, 2008 and distributed to foreign investors after the year of 2008.

        According to the Arrangement between Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income, signed on August 21, 2006, or the Hong Kong Tax Treaty, a company incorporated in Hong Kong, such as eHi Hong Kong and L&L, is subject to withholding income tax at a rate of 5% on dividends it receives from its PRC subsidiaries if it holds a 25% or more interest in such PRC subsidiaries, or at a rate of 10% if it holds less than a 25% interest in such subsidiaries. In addition, the SAT promulgated a tax circular on October 27, 2009, or Circular 601, which provides that tax treaty benefits will be denied to "conduit" or shell companies without business substance, and a beneficial ownership analysis will be used based on a "substance over form" principle to determine whether or not to grant tax treaty benefits. On June 29, 2012, the SAT issued the Announcement of the SAT regarding Recognition of "Beneficial Owner" under Tax Treaties, or Announcement 30, which provides that a comprehensive analysis should be made when determining the beneficial owner status based on various factors that are supported by various types of documents, including the articles of association, financial statements, records of cash movements, board meeting minutes, board resolutions, staffing and materials, relevant expenditures, functions and risk assumption as well as relevant contracts and other information. As a result, although our Hong Kong subsidiaries eHi Hong Kong and L&L, each holds an interest of more than 25% in the PRC subsidiaries, it's more likely than not that eHi Hong Kong and L&L, as holding companies without other business substance, would not be entitled to the tax treaty benefits and enjoy the favorable 5% rate applicable under the Hong Kong Tax Treaty on dividends. If eHi Hong Kong and L&L cannot be recognized as the beneficial owner of the dividends to be paid by our PRC subsidiaries to us, such dividends will be subject to a withholding tax of 10% as provided by the EIT Law. As of the date of this prospectus, our PRC subsidiaries have not paid any dividends, and do not currently plan to pay dividends in the foreseeable future, to our company and Hong Kong subsidiaries.

We may be subject to additional tax payments as a result of the recent changes in PRC tax law.

        Prior to January 1, 2012, pursuant to the Provisional Regulation of China on Business Tax and its Implementing Rules, an entity or individual rendering services in China was generally subject to a business tax at the rate of 5% on revenues generated from the provision of such services. Since January 1, 2012, the PRC Ministry of Finance, or the MOF, and the SAT have started to implement the VAT Pilot Program, which imposes value-added tax, or VAT, in lieu of business tax for certain industries in Shanghai. Since August 1, 2012, the VAT Pilot Program has been expanded to and implemented in other regions, including Beijing, Tianjin, Jiangsu, Zhejiang, Anhui, Fujian, Hubei and Guangdong. Since August 1, 2013, the VAT Pilot Program has been expanded nationwide.

        As a result of the VAT Pilot program, in general, we are subject to a 17% VAT for car rentals and an 11% VAT for car services, which have the effect of reducing our net revenues. Despite the decrease in net revenues, we can benefit from the deductible VAT we paid for vehicle purchases to offset the increased tax payments. In February 2012, relevant local government authorities in Shanghai issued a notice to provide financial subsidies to companies incorporated in Shanghai which are subject to a higher tax burden due to the VAT Pilot Program. However, such financial subsidies may not be able to offset the increased taxes resulting from the VAT Pilot Program. The VAT Pilot Program is new, and the interpretation and enforcement of such program may differ in different regions and may involve uncertainties. If we are unable to obtain sufficient qualified VAT invoices from our suppliers to offset

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the increased tax payments and the financial subsidies from the government are not sufficient to make up for the increased tax burden, the VAT Pilot Program will have a material adverse effect on our financial condition and results of operations.

Limitations on the ability of our operating subsidiaries to pay dividends or other distributions to us could have a material adverse effect on our ability to conduct our business.

        As a holding company, we rely principally on dividends and other distributions on equity paid by our PRC subsidiaries for our cash requirements, including funds necessary to service any debt we may incur. If any of our PRC subsidiaries incurs debt on its own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to us. Furthermore, relevant PRC laws and regulations permit payments of dividends by our PRC subsidiaries only out of their retained earnings, if any, determined in accordance with PRC accounting standards and regulations. Under PRC laws and regulations, our PRC subsidiaries are required to set aside a portion of their net income each year to fund a statutory reserve or reserve fund. This reserve is not distributable as dividends. As a result, our PRC subsidiaries are restricted in their ability to transfer a portion of their net assets to us in the form of dividends, loans or advances.

        Under existing PRC foreign exchange regulation, payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without SAFE approval by complying with certain procedural requirements. However, approval from or registration with competent government authorities is required where the Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC government may at its discretion restrict access to foreign currencies for current account transactions in the future. If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demands, we may not be able to pay dividends in foreign currencies to our shareholders. Further, there is no assurance that new regulations will not be promulgated in the future that would have the effect of further restricting the ability of our operating subsidiaries to pay dividends or other distributions out of PRC.

PRC regulations relating to the establishment of offshore special purpose vehicles by PRC residents may subject our PRC resident shareholders or us to penalties and limit our ability to acquire PRC companies or inject capital into our PRC subsidiaries, limit our PRC subsidiaries' ability to increase their registered capital or distribute profits to us, or otherwise adversely affect us.

        On July 4, 2014, the SAFE issued the Notice on Issues Relating to the Administration of Foreign Exchange for Overseas Investment and Financing and Reverse Investment by Domestic Residents via Special Purpose Vehicles, or Circular 37, which replaced the Notice on Issues Relating to the Administration of Foreign Exchange for the Financing and Reverse Investment by Domestic Residents via Offshore Special Purpose Vehicles issued by SAFE in October 2005, or Circular 75. Pursuant to Circular 37, any PRC residents, including both PRC institutions and individual residents, are required to register with the local SAFE branch before making contribution to a company set up or controlled by the PRC residents outside of the PRC for the purpose of overseas investment or financing with their legally owned domestic or offshore assets or interests, referred to in this circular as a "special purpose vehicle." Under Circular 37, the term "PRC institutions" refers to entities with legal person status or other economic organizations established within the territory of the PRC. The term "PRC individual residents" includes all PRC citizens (also including PRC citizens abroad) and foreigners who habitually reside in the PRC for economic benefits. A registered special purpose vehicle is required to amend its SAFE registration in the event of any change of basic information including PRC individual resident shareholder, name, term of operation, or PRC individual resident's increase or decrease of capital, transfer or exchange of shares, merger, division or other material changes. In addition, if a non-listed

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special purpose vehicle grants any equity incentives to directors, supervisors or employees of domestic companies under its direct or indirect control, the relevant PRC individual residents could register with the local SAFE branch before exercising such options. The SAFE simultaneously issued a series of guidances to its local branches with respect to the implementation of Circular 37. Circular 37 modified certain defined terms under Circular 75 to clarify the SAFE registration scope. For example, Circular 37 broadened the definition of special purpose vehicle to offshore entities that were (i) established for the purpose of overseas investments by PRC residents (in addition to for the purpose of financing as defined under Circular 75) and (ii) established by PRC residents with their legally owned offshore assets or interests (in addition to domestic assets or interests as defined under Circular 75); and it also broadened the definition of reverse investment to include establishing new foreign invested entities or projects as a way of domestic direct investment by PRC residents, directly or indirectly, through special purpose vehicle, which was excluded by Circular 75. Furthermore, Circular 37 modified certain SAFE registration procedures and requirements for special purpose vehicles and clarified the SAFE registration procedures for equity incentive awards granted by non-listed special purpose vehicles to directors, supervisors or employees of their controlled domestic companies. We have requested our current shareholders and/or beneficial owners to disclose whether they or their shareholders or beneficial owners fall within the ambit of the SAFE notice and urge those who are PRC residents to register with the local SAFE branch as required under the SAFE notice. As Circular 37 was newly promulgated, there is uncertainty as to its application and interpretation. We cannot assure you that our shareholders and/or beneficial owners have fully complied with registration requirement under Circular 37. The failure of these shareholders and/or beneficial owners to timely register or amend their SAFE registrations pursuant to the SAFE notice or the failure of future shareholders and/or beneficial owners of our company who are PRC residents to comply with the registration procedures set forth in the SAFE notice may subject such shareholders, beneficial owners and/or our PRC subsidiaries to fines and legal sanctions and may also limit our ability to contribute additional capital into our PRC subsidiaries, limit our PRC subsidiaries' ability to distribute dividends to our company or otherwise adversely affect our business.

PRC regulations of loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using the proceeds of this offering to make loans or additional capital contributions to our PRC operating subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.

        In utilizing the proceeds of this offering in the manner described in "Use of Proceeds" herein, as an offshore holding company of our PRC operating subsidiaries, we may make loans to our PRC subsidiaries. Any loans to our PRC subsidiaries are subject to PRC regulations. For example, loans by us to our subsidiaries in China, which are foreign invested enterprises, to finance their activities cannot exceed statutory limits and must be registered with SAFE or its local branches (if in foreign currencies) or with the People's Bank of China, or the PBOC, or its local branches and SAFE or its local branches (if in Renminbi).

        We may also decide to finance our subsidiaries by means of capital contributions. These capital contributions must be approved by MOFCOM on its local branches. If these capital contributions are made in Renminbi, they must also be registered with the PBOC or its local branch after obtaining the approval from MOFCOM and the business license. See "Regulations—Regulations on cross-border direct investment in Renminbi." We cannot assure you that we will obtain these government approvals and registrations on a timely basis, if at all, with respect to future loans or capital contributions by us to our PRC subsidiaries. If we fail to receive such approvals and registrations, our ability to use the proceeds of this offering and to capitalize our PRC operations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our business.

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        On August 29, 2008, SAFE promulgated Circular 142, which requires that the registered capital of a foreign-invested company converted from foreign currencies only be used for purposes within the business scope approved by the applicable government authority and may not be used for equity investments or real estate investments in China. In addition, a foreign-invested company may not change the use of its Renminbi denominated registered capital that is converted from foreign currencies without SAFE's prior approval. Violations of Circular 142 and other regulations on foreign currency exchange could result in severe penalties, including fines and confiscation of illegal gains. As a result, Circular 142 may significantly limit our ability to transfer the net proceeds from our offerings and subsequent financings to our PRC subsidiaries, which may adversely affect our liquidity and our ability to fund and expend our business in the PRC.

        Furthermore, on November 9, 2010, SAFE promulgated the Notice Relating to Strengthening the Administration of Foreign Exchange Businesses, which tightens the regulation on the settlement of net proceeds from overseas offerings, such as this offering. The restrictions imposed by Circular 142 and other relevant regulations have limited, and will continue to limit, our ability to deploy funds in our PRC subsidiaries in a manner most efficient for our business operations. Also, we may not be able to convert the net proceeds from this offering into Renminbi to invest in or acquire any other PRC companies, or establish other subsidiaries in China. See "Regulations—Regulations on foreign currency exchange and dividend distribution".

We and our investors might face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies.

        Pursuant to the Notice on Strengthening Administration of Enterprise Income Tax for Share Transfers by Non-PRC Resident Enterprises, or Circular 698, issued by the SAT on December 10, 2009 with retroactive effect from January 1, 2008, when a non-PRC resident enterprise transfers the equity interests of a PRC resident enterprise indirectly by disposing of the equity interests of an overseas holding company, or an Indirect Transfer, and such overseas holding company is located in a tax jurisdiction that: (i) has an effective tax rate less than 12.5% or (ii) does not tax foreign income of its residents, non-PRC resident enterprise, being the transferor, shall report this Indirect Transfer to the competent tax authority of the PRC resident enterprise. Using a "substance over form" principle, the PRC tax authority may disregard the existence of the overseas holding company if the Indirect Transfer lacks a reasonable commercial purpose and is arranged for the purpose of reducing, avoiding or deferring PRC tax. As a result, gains derived from such Indirect Transfer may be subject to PRC enterprise income tax at a rate of up to 10%. Circular 698 also provides that in the event that a non-PRC resident enterprise transfers its equity interests in a PRC resident enterprise to its related parties at a price lower than their fair market value, the relevant tax authority has the power to make a reasonable adjustment to the taxable income of the transaction. In addition, SAT released SAT Public Notice (2011) No. 24, or Public Notice 24, which took effect on April 1, 2011, to clarify several issues related to Circular 698. Under Public Notice 24, the term "effective tax rate" refers to the effective tax rate on the gain derived from a disposition of any equity interest of an overseas holding company. There is uncertainty as to the application of Circular 698. For example, while the term "Indirect Transfer" is not clearly defined, it is understood that the relevant PRC tax authorities have jurisdiction regarding requests for information over a wide range of foreign entities having no direct contact with China. Moreover, the implementation of Circular 698, such as the process and format of the reporting of an Indirect Transfer to the competent tax authority of the relevant PRC resident enterprise, remains unclear. In addition, there is no formal declaration with regard to how to determine whether a foreign investor has adopted an abusive arrangement in order to reduce, avoid or defer PRC tax. Although Circular 698 does not apply to the situation where both the purchase and the sales of shares of PRC resident enterprises are on a public stock exchange, Circular 698 may be determined by the tax authorities to be applicable to transactions such as our future disposal of subsidiaries, acquisitions of complementary businesses, or restructuring of our organizational structure where non-PRC resident

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investors are involved. As a result, our company and our non-PRC resident investors, other than those purchasing and selling shares on a public exchange, may, when doing the above-mentioned transactions, become at risk of being taxed under Circular 698 and may be required to expend valuable resources to comply with Circular 698 or to establish that we or our non-PRC resident shareholders should not be taxed under Circular 698, which may have a material adverse effect on our financial condition and results of operations or such non-PRC resident investors' investments in us.

If the PRC government deems that the contractual arrangements in relation to our variable interest entity do not comply with PRC governmental restrictions on foreign investment, or if these regulations or the interpretation of existing regulations changes in the future, we could be subject to penalties or be forced to relinquish our interests in the variable interest entity.

        Foreign ownership of certain types of Internet and mobile services is subject to restrictions under applicable PRC laws, rules and regulations. For example, a commercial operator of Internet content services must obtain a value-added telecommunication business operating license, or ICP license, issued by the appropriate telecommunications authorities. Our current operations are not subject to the ICP license requirements. To further expand our Internet and mobile services, we entered into a series of contractual arrangements in March 2014 with our PRC incorporated variable interest entity eHi Information, and its shareholders. eHi Information obtained the ICP license from the relevant telecommunication authorities on September 24, 2014. eHi Information currently does not have any operation and we do not expect eHi Information to contribute a material portion of our net revenues and operations in the foreseeable future.

        These contractual arrangements provide us with effective control over the variable interest entity and provide us the right to obtain substantially all of the economic benefits from the variable interest entity. Although this structure is commonly adopted by many Internet companies in China, the relevant PRC regulatory authorities have broad discretion in determining whether a particular contractual structure is in violation of the law. For example, on July 13, 2006, the Ministry of Information Industry, the predecessor of the Ministry of Industry and Information Technology, or the MIIT publicly released the Notice on Strengthening the Administration of Foreign Investment in Operating Value-added Telecommunications Business, or the MIIT Notice, which reiterates certain provisions under the Administrative Rules for Foreign Investments in Telecommunications Enterprises promulgated by the State Council in 2001 and amended in 2008 prohibiting a domestic company that holds an ICP license, from renting, transferring or selling a telecommunications license to foreign investors in any form, or providing any resources, sites or facilities to foreign investors that intend to conduct value-added telecommunication business illegally in China. Trademarks and domain names that are used in the provision of Internet content services must be owned by the ICP license holder. There is currently no official interpretation or implementation practice under the MIIT Notice. Due to a lack of interpretative materials from the authorities, it is uncertain whether the MIIT would consider our corporate structure and the contractual arrangements as a kind of foreign investment in telecommunication services. Therefore, it is unclear what impact the MIIT Notice might have on us. The PRC government may not agree that these arrangements comply with PRC licensing, registration or other regulatory requirements, with existing policies or with requirements or policies that may be adopted in the future.

        In the opinion of Grandall Law Firm (Shanghai), our PRC counsel, the ownership structures of our wholly foreign owned enterprise and our variable interest entity in China do not violate any applicable PRC law, regulation or rule currently in effect; and the contractual arrangements between our wholly foreign owned enterprise, our variable interest entity and its equity holders governed by PRC law are valid, binding and enforceable in accordance with their terms and applicable PRC laws and regulations currently in effect and do not violate any applicable PRC law, rule or regulation currently in effect. However, our PRC counsel has also advised us that there are substantial

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uncertainties regarding the interpretation and application of current PRC laws, rules and regulations. Accordingly, the PRC regulatory authorities and PRC courts may in the future take a view that is contrary to the opinion of our PRC legal counsel.

        It is uncertain whether any new PRC laws, rules or regulations relating to variable interest entity structures will be adopted or if adopted, what they would provide. If we, our PRC subsidiaries or our variable interest entity are found to be in violation of any existing or future PRC laws, rules or regulations, or fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures, including revoking the business and operating licenses of our PRC subsidiaries or the variable interest entity, requiring us to discontinue or restrict certain Internet operations, requiring us to restructure or taking other regulatory or enforcement actions against us. If we are not able to restructure our ownership structure and operations in a satisfactory manner, our ability to expand our Internet and mobile services may be limited.

Our contractual arrangements may not be as effective in providing control over the variable interest entity as direct ownership.

        We entered into contractual arrangements with our variable interest entity. These contractual arrangements may not be as effective as direct ownership in providing us with control over our variable interest entity.

        If we had direct ownership of the variable interest entity, we would be able to exercise our rights as an equity holder directly to effect changes in the boards of directors of the entity, which could effect changes at the management and operational level. Under our contractual arrangements, we rely on the variable interest entity and the variable interest entity equity holders to perform their obligations in order to exercise our control over the variable interest entity. The variable interest entity equity holders may have conflicts of interest with us or our shareholders, and they may not act in the best interests of our company or may not perform their obligations under these contracts. We may replace the equity holders of the variable interest entity at any time pursuant to the contractual arrangements. However, if any dispute relating to these contracts remains unresolved, we will have to enforce our rights under the contractual arrangements through the operations of PRC law and courts, which will be subject to uncertainties in the PRC legal system. Consequently, the contractual arrangements may not be as effective in ensuring our control over the relevant portion of our business operations as direct ownership.

It may be difficult to effect service of process upon, or to enforce judgments against us, our directors or our senior management members who reside in the PRC.

        Because most of our officers and directors will reside outside of the United States, it may be difficult, if not impossible, to acquire jurisdiction over these persons in the event a lawsuit is initiated by shareholders in the United States against us and/or our officers and directors. It is also unclear if the Treaty of People's Republic of China and United States of America on Criminal Judicial Assistance currently in effect between the United States and the PRC would permit effective enforcement of criminal penalties under United States federal securities laws. Furthermore, because substantially all of our assets are located in the PRC, it would also be extremely difficult to access those assets to satisfy an award entered against us in a United States court. Moreover, we have been advised that the PRC does not have treaties with the United States providing for the reciprocal recognition and enforcement of judgments of courts. As a result, it may not be possible for investors in the United States to enforce their legal rights, to effect service of process upon our directors or officers or to enforce judgments of United States courts predicated upon civil liabilities and criminal penalties of our directors and officers under federal securities laws.

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We may be subject to fines and legal sanctions imposed by the SAFE or other Chinese government authorities if we or our employees fail to comply with PRC regulations relating to employee share incentive plans adopted by overseas-listed companies for PRC domestic individuals.

        On December 25, 2006, the PBOC issued the Administration Measures on Individual Foreign Exchange Control, or the PBOC Regulation. On January 5, 2007, the SAFE issued the Implementing Rules for the PBOC Regulation. Both of these regulations became effective on February 1, 2007. According to these regulations, all foreign exchange matters relating to employee stock holding plans, share option plans or similar plans of overseas-listed companies with domestic individuals' participation require approval from the SAFE or its local branch. In February 2012, the SAFE promulgated the Notice on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Share Incentive Plan of Overseas-Listed Company, or the Share Option Rule, which replaced the Application Procedures of Foreign Exchange Administration for Domestic Individuals Participating in Employee Share Holding Plan or Share Option Plan of Overseas-Listed Company issued by the SAFE on March 28, 2007. Under the Share Option Rule, PRC domestic individuals who participate in any share incentive plan including employee share holding plan, share option plan or similar plan in an overseas-listed company are required to register with the relevant local SAFE branch and complete certain other procedures related to the share incentive plan through a PRC agent. Under the Share Option Rule, PRC domestic individuals include PRC citizens (including Hong Kong, Macau and Taiwan nationals) and foreign nationals who have continuously resided in China for at least a year, and a PRC agent may be a domestic company participating in the share incentive plan or a domestic institution that is qualified to engage in assets custodian business and has been duly designated by a domestic company.

        We and our employees who are PRC domestic individuals and have participated in our 2010 Plan will be subject to the Share Option Rule upon the listing of our ADSs on the NYSE. If we or our employees fail to comply with these regulations, we or our employees may be subject to fines or other legal sanctions imposed by the SAFE or other Chinese government authorities. See "Regulations—Regulations on employee share options." In addition, the SAT has issued several circulars concerning employee share options. Under these circulars, our employees working in China who exercise our share options will be subject to PRC individual income tax. Our PRC subsidiaries have obligations to make filings with relevant tax authorities related to employee share options and withhold individual income taxes resulting from the exercise of their share options. If our employees fail to pay and we fail to withhold their income taxes, we may face sanctions imposed by tax authorities or other PRC government authorities.

Our current employment practices may be restricted under the Labor Contract Law and other labor-related laws of the PRC and our labor costs may increase as a result.

        On June 29, 2007, the PRC National People's Congress enacted the Labor Contract Law, which became effective on January 1, 2008 and was amended on December 28, 2012. On September 18, 2008, the PRC State Council issued the Implementing Rules for the PRC Labor Contract Law. The Labor Contract Law and its Implementing Rules impose requirements concerning, among other things, the types of contracts to be executed between an employer and its employees, time limits for probationary periods and for how long an employee can be placed in a fixed-term employment contract. As the interpretation and implementation of the Labor Contract Law and other labor-related laws are still evolving, our employment policies and practice may not be deemed in compliance at all time. For example, in accordance with the Labor Contract Law and its Implementing Rules, the Ministry of Human Resources and Social Security promulgated Interim Provisions on Labor Dispatching, or Circular 22, effective from March 1, 2014, which provides that an employer shall strictly control the number of employees under labor dispatching arrangements and dispatched employees can only be used in temporary, ancillary and replaceable positions. The number of dispatched workers shall be

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reduced to no more than 10% of the total number of employees within two years after March 1, 2014. We outsource substantially all of our employees from Qian Jin Network Information Technology (Shanghai) Co., Ltd., or Qian Jin, an independent third-party professional human resources company. If we fail to reduce the number of our dispatched employees to no more than 10% of the total number of employees prior to the expiration of the two-year period as required by Circular 22, we may be subject to a fine ranging from RMB1,000 to RMB5,000 per dispatched employee. We intend to adjust our employment arrangements gradually to comply with such requirements. In addition, under the Labor Contract Law, a human resources company shall perform an employer's obligations, including payment of remuneration to the dispatched employees and contribution of social insurance premiums. Under the labor dispatch service agreements between us and Qian Jin, we, as the entity receiving labor dispatch services, shall make a monthly payment in an amount that includes the dispatched employees' salaries, social insurance contributions and our service fees to Qian Jin. However, we cannot assure you that Qian Jin has fully performed or will consistently fulfill its obligations, including any social insurance or housing fund contributions. We may also be held jointly and severally liable with Qian Jin for damages any violation caused to dispatched employees. If we are held liable for any shortage in the social insurance or housing fund contribution for the dispatched employees or other penalties or fees related to our employment practice, our results of operations and financial condition may be adversely affected.

        In addition, according to the Labor Contract Law and its implementing rules, if we intend to enforce the non-compete provision with our employees in the employment contracts or confidentiality agreements, we have to compensate our employees on a monthly basis during the term of the restriction period after the termination or ending of the employment contract, which may cause extra expenses to us.

The discontinuation of any tax incentives and government subsidies available to us could, in each case, decrease our net income and materially and adversely affect our financial condition and results of operations.

        Our PRC subsidiaries are incorporated in the PRC and are governed by applicable PRC income tax laws and regulations. Under the EIT Law and its Implementing Rules, both of which became effective on January 1, 2008, the PRC has adopted a uniform enterprise income tax rate of 25% for all PRC enterprises (including foreign-invested enterprises). The EIT Law and its Implementing Rules also permit qualified small-scaled enterprises with low profit margins to enjoy a reduced 20% enterprise income tax rate. On November 29, 2011, a circular that was jointly issued by the SAT and the MOF, or Circular 117, further provided that if a qualified small-scaled enterprise with low profit margins has an annual taxable income of not more than RMB60,000, then 50% of its taxable income can be exempted from enterprise income tax until December 31, 2015, further reducing the effective enterprise income tax rate to 10% until then. One of our PRC subsidiaries, Shanghai eHi Siping Car Rental Co., Ltd. was eligible for this tax incentive and paid enterprise income tax at a reduced rate of 10% for the taxable year of 2013.

        In addition, some local governments allowed certain enterprises registered in their jurisdictions to receive certain government subsidies according to local policies. According to the agreements between a local government agency in Shanghai and eHi Rental and Shanghai Smart Brand, respectively, such local government agency agreed to grant to eHi Rental and Shanghai Smart Brand, at its own discretion, certain subsidies which are calculated based on a certain portion of the business taxes paid by eHi Rental and Shanghai Smart Brand based on their revenues. In 2012 and 2013, eHi Rental received government subsidies of RMB3.7 million and RMB3.0 million (US$0.5 million), and in 2013 Shanghai Smart Brand received government subsidies of RMB0.6 million, respectively. Furthermore, the PRC government recently adopted the VAT Pilot Program, which was initiated in Shanghai and now is rolled out nationwide. Pursuant to this program, starting from January 1, 2012, our subsidiaries in Shanghai, including eHi Rental, are required to pay VAT instead of business tax. In February 2012,

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Shanghai Bureau of Finance and Bureau of Taxation jointly released the Notice [2012] No. 5 which provided a temporary financial subsidy in connection with the VAT Pilot Program, pursuant to which we received financial subsidies from various levels of local governments in relation to the VAT Pilot Program. For example, we received a financial subsidy of RMB10.3 million in connection with the VAT Pilot Program in the second quarter of 2014. We also received government subsidies for the purchase of certain vehicle models approved by the local government as well as government grants for our technology achievements from the Scientific and Technological Commission of Shanghai. However, preferential tax treatments and government subsidies are subject to review and may be adjusted or revoked at any time in the future. The discontinuation of any preferential tax treatments or government subsidies available to us will cause our effective tax rate to increase, which will decrease our net income and our financial condition and result of operations may be materially and adversely affected.

Our legal rights to lease certain properties could be challenged, which could prevent us from continuing to operate the affected service locations or increase the costs associated with operating these service locations.

        We rely on leases with third parties who either own the properties or lease the properties from the ultimate property owner. As of June 30, 2014, 39 of our service locations were leased from lessors who were unable to provide us with copies of title certificates or documents evidencing the authorization or consent of the owners of such properties. Where the lessors do not have the proper legal right to lease the properties, the corresponding lease agreements may be deemed invalid. Furthermore, some properties may not be designated for commercial use. If we are not adequately indemnified by the lessors for our related losses, our business may be adversely affected. Some of the properties we lease from the third parties have been mortgaged by the owners prior to leasing to us. We may not be able to continue using such properties if the mortgage is foreclosed. In addition, under the PRC law, failure to register a lease agreement with the local housing bureau may result in the risk that we may not be able to continue to occupy the relevant properties if the lease is challenged by third parties. Our standard lease agreement generally requires the lessor to make such registrations, however, as of June 30, 2014, the lease agreements relating to a number of our service locations had not been duly registered by the relevant lessors. Accordingly, if these lessors do not have the appropriate titles to the properties or necessary approvals from the ultimate owners or fail to make the requisite registrations, or if the mortgage over the leased properties is foreclosed, we may be unable to continue to operate the affected properties or incur additional costs associated with operating these service locations.

Risks related to our ADSs and this offering

There has been no public market for our common shares or ADSs prior to this offering, and an active trading market for our ADSs may not develop after this offering. As a result, you may not be able to resell your ADSs at or above the price you paid, or at all, and the trading price for our ADSs may fluctuate significantly.

        Prior to this offering, there has been no public market for our common shares or ADSs. We have applied to have our ADSs listed on the NYSE. Our common shares will not be listed on any exchange or quoted for trading on any over-the-counter trading system. If an active trading market for our ADSs does not develop after this offering, the market price and liquidity of our ADSs could be materially and adversely affected.

        The initial public offering price for our ADSs will be determined by negotiations between us and the underwriters and may bear no relationship to the market price for our ADSs after the offering. An active trading market for our ADSs may not develop and the market price of our ADSs may decline below the initial public offering price. You may lose part or all of your investment in our ADSs.

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The market price for our ADSs may be volatile, which could result in substantial losses to investors.

        The market price for our ADSs may be volatile and subject to wide fluctuations in response to factors such as actual or anticipated fluctuations in our quarterly results of operations, changes in financial estimates by securities research analysts, changes in the economic performance or market valuations of other car rentals and car services providers, announcements by us or our competitors of material acquisitions, strategic partnerships, joint ventures or capital commitments, fluctuations of exchange rates between the Renminbi and the U.S. dollar, announcements regarding litigation or administrative proceedings involving us, release or expiry of lock-up or other transfer restrictions on our outstanding shares or ADSs, sales or perceived sales of additional common shares or ADSs and economic or political conditions in China. In addition, the performance, and fluctuation in market prices, of other companies with business operations located mainly in China that have listed their securities in the United States may affect the volatility in the price of and trading volumes of our ADSs. The securities of some China-based companies that have listed their securities in the United States have experienced significant volatility since their initial public offerings, including, in some cases, substantial price declines in the trading prices of their securities. The trading performances of these China-based companies' securities after their offerings may affect the attitudes of investors toward China-based companies listed in the United States, which consequently may impact the trading performance of our ADSs, regardless of our actual operating performance. In addition, any negative news or perceptions about inadequate corporate governance practices or fraudulent accounting, corporate structure or other matters of other China-based companies may also negatively affect the attitudes of investors towards China-based companies in general, including us, regardless of whether we have engaged in any inappropriate activities. Volatility in global capital markets, such as the recent global financial services and economic crises, could also have an adverse effect on the market price of our ADSs. Furthermore, the securities market has from time to time experienced significant price and volume fluctuations that are not related to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our ADSs.

Since the initial public offering price is substantially higher than our net tangible book value per share, you will incur immediate and substantial dilution.

        If you purchase our ADSs in this offering, you will pay more for your ADSs than the amount paid by our existing shareholders for their common shares on a per ADS basis. As a result, you will experience immediate and substantial dilution of approximately US$5.92 per ADS (assuming no exercise by the underwriters of their option to purchase additional ADSs), representing the difference between our net tangible book value per ADS as of June 30, 2014, after giving effect to this offering and the concurrent private placement at an assumed initial public offering price of US$13.00 per ADS, the mid-point of the estimated public offering price range shown on the front cover of this prospectus. In addition, you may experience further dilution to the extent that our common shares are issued upon the exercise of share options. See "Dilution" for a more complete description of how the value of your investment in our ADSs will be diluted upon completion of this offering.

Substantial future sales or the perception of sales of our ADSs or common shares in the public market could cause the price of our ADSs to decline.

        Sales of our ADSs or Class A common shares in the public market after this offering, or the perception that these sales could occur, could cause the market price of our ADSs to decline. Upon completion of this offering, we will have 113,738,217 common shares outstanding, including 20,000,000 Class A common shares represented by 10,000,000 ADSs, assuming the underwriters do not exercise their option to purchase additional ADSs. All ADSs sold in this offering, will be freely transferable without restriction or additional registration under the Securities Act of 1933, as amended, or the Securities Act. The remaining common shares outstanding after this offering will be available for

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sale, upon the expiration of the applicable lock-up period beginning from the date of this prospectus, subject to volume and other restrictions as applicable under Rule 144 and Rule 701 under the Securities Act. See "Shares Eligible for Future Sale" and "Underwriting" for a detailed description of the lock-up restrictions. Any or all of these shares may be released prior to expiration of the lock-up period at the discretion of the lead underwriters for this offering. To the extent shares are released before the expiration of the lock-up period and these shares are sold into the market, the market price of our ADSs could decline.

        In addition, certain holders of our common shares have the right to cause us to register the sale of shares under the Securities Act, subject to a 180-day lock-up period in connection with this offering. Registration of these shares under the Securities Act would result in these shares becoming freely tradable without restriction under the Securities Act immediately upon the effectiveness of the related registration statement. Sales of these registered shares in the public market could cause the price of our ADSs to decline.

Our proposed dual-class voting structure will limit your ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders of our Class A common shares and ADSs may view as beneficial.

        Our common shares will be divided into Class A common shares and Class B common shares immediately prior to the completion of this offering. Holders of Class A common shares will be entitled to one vote per share, while holders of Class B common shares will be entitled to ten votes per share. In addition, certain matters including those related to the change of control of our company require an additional approval by the holders of a majority of Class A common shares voting as a separate class. We will issue Class A common shares represented by our ADSs in this offering and the concurrent private placement. All of the common shares and preferred shares held by our existing shareholders and outstanding as of the date of this prospectus, and all of the common shares to be issued pursuant to our 2010 Plan or upon the exercise of options granted to our existing shareholders and outstanding as of the date of this prospectus, will be automatically re-designated and/or converted into Class B common shares on a one-for-one basis immediately prior to the completion of this offering. We intend to maintain the dual-class voting structure after the completion of this offering. Each Class B common share is convertible into one Class A common share at any time by the holder thereof. Class A common shares are not convertible into Class B common shares under any circumstances. Class B common shares will be automatically converted into the same number of Class A common shares under certain circumstances, including any transfer of Class B common shares by a holder thereof to any person or entity which is not an affiliate of such holder.

        Due to the disparate voting powers attached to these two classes of common shares, Class B common shares issued and outstanding immediately after the completion of this offering will represent 75.7% of our total issued and outstanding shares and 96.9% of the then total voting power, assuming (i) no exercise of the underwriters' option to purchase additional ADSs and (ii) the issuance and sale of 7,692,306 Class A common shares in the concurrent private placement based on the assumed initial public offering price of US$13.00 per ADS, the mid-point of the estimated initial public offering price range shown on the front cover of this prospectus. Therefore, our Class B common shareholders will have decisive influence over matters requiring shareholders' approval, including election of directors and significant corporate transactions, and their interest may not be aligned with us or other shareholders of our company. This concentrated control will limit your ability to influence corporate matters and could discourage others from pursuing any potential merger, takeover or other change of control transactions that holders of Class A common shares and ADSs may view as beneficial, which could deprive our shareholders of an opportunity to receive a premium for their shares as part of a sale of our company and may reduce the price of our ADSs.

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Holders of ADSs have fewer rights than shareholders and must act through the depositary to exercise their rights.

        Holders of our ADSs do not have the same rights as our shareholders and may only exercise the voting rights with respect to the underlying Class A common shares in accordance with the provisions of the deposit agreement. Under our ninth amended and restated memorandum and articles of association, which will become effective upon completion of this offering, the minimum notice period required to convene a general meeting is seven days. When a general meeting is convened, you may not receive sufficient notice of a shareholders' meeting to permit you to withdraw your Class A common shares to allow you to cast your vote with respect to any specific matter. In addition, the depositary and its agents may not be able to send voting instructions to you or carry out your voting instructions in a timely manner. We will make reasonable efforts to cause the depositary to extend voting rights to you in a timely manner, but we cannot assure you that you will receive the voting materials in time to ensure that you can instruct the depositary to vote your ADSs. Furthermore, the depositary and its agents will not be responsible for any failure to carry out any instructions to vote, for the manner in which any vote is cast or for the effect of any such vote. As a result, you may not be able to exercise your right to vote and you may lack recourse if your ADSs are not voted as you request. In addition, in your capacity as an ADS holder, you will not be able to call a shareholders' meeting.

You may not receive distributions on our common shares or any value for them if such distribution is illegal or if any required government approval cannot be obtained in order to make such distribution available to you.

        The depositary of our ADSs has agreed to pay to you the cash dividends or other distributions it or the custodian receives on Class A common shares or other deposited securities underlying our ADSs, after deducting its fees and expenses. You will receive these distributions in proportion to the number of Class A common shares your ADSs represent. However, the depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any holders of ADSs. For example, it would be unlawful to make a distribution to a holder of ADSs if it consists of securities that require registration under the Securities Act but that are not properly registered or distributed under an applicable exemption from registration. The depositary may also determine that it is not feasible to distribute certain property through the mail. Additionally, the value of certain distributions may be less than the cost of mailing them. In these cases, the depositary may determine not to distribute such property. We have no obligation to register under U.S. securities laws any ADSs, common shares, rights or other securities received through such distributions. We also have no obligation to take any other action to permit the distribution of ADSs, common shares, rights or anything else to holders of ADSs. This means that you may not receive distributions we make on our common shares or any value for them if it is illegal or impractical for us to make them available to you. These restrictions may cause a material decline in the value of our ADSs.

You may not be able to participate in rights offerings and may experience dilution of your holdings as a result.

        We may from time to time distribute rights to our shareholders, including rights to acquire our securities. Under the deposit agreement for the ADSs, the depositary will not offer those rights to ADS holders unless both the rights and the underlying securities to be distributed to ADS holders are registered under the Securities Act, or the distribution of them to ADS holders is exempted from registration under the Securities Act with respect to all holders of ADSs. We are under no obligation to file a registration statement with respect to any such rights or underlying securities or to endeavor to cause such a registration statement to be declared effective. In addition, we may not be able to rely on an exemption from registration under the Securities Act to distribute such rights and securities.

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Accordingly, holders of our ADSs may be unable to participate in our rights offerings and may experience dilution in their holdings as a result.

You may be subject to limitations on transfer of your ADSs.

        Your ADSs are transferable on the books of the depositary. However, the depositary may close its transfer books at any time or from time to time when it deems expedient in connection with the performance of its duties. In addition, subject to the limitations and requirements under Form F-6 of the SEC, the depositary may refuse to deliver, transfer or register transfers of ADSs generally when our books or the books of the depositary are closed, or at any time if we or the depositary deem it advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other reason in accordance with the terms of the deposit agreement.

You may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. federal courts may be limited because we are organized under Cayman Islands law, conduct substantially all of our operations in China and a majority of our directors and officers reside outside the United States.

        We are incorporated in the Cayman Islands, and conduct substantially all of our operations in China through our wholly owned subsidiaries in China. A majority of our directors and officers reside outside the United States and some or all of the assets of those persons are located outside of the United States. As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United States in the event that you believe that your rights have been infringed under the U.S. securities laws or otherwise. Even if you are successful in bringing an action of this kind, the respective laws of the Cayman Islands and China may render you unable to enforce a judgment against our assets or the assets of our directors and officers. In addition, there is uncertainty as to whether the courts of the Cayman Islands or the PRC would recognize or enforce judgments of U.S. courts against us or such persons predicated upon the civil liability provisions of the securities laws of the United States or any state, and it is uncertain whether such Cayman Islands or PRC courts would be competent to hear original actions brought in the Cayman Islands or the PRC against us or such persons predicated upon the securities laws of the United States or any state. There is no statutory recognition in the Cayman Islands of judgments obtained in the United States, although the courts of the Cayman Islands will generally recognize and enforce a non-penal judgment of a foreign court of competent jurisdiction without retrial on the merits. For more information regarding the relevant laws of the Cayman Islands and China, see "Enforceability of Civil Liabilities."

        Our corporate affairs are governed by our memorandum and articles of association and by the Companies Law (2013 Revision) and common law of the Cayman Islands. The rights of shareholders to take legal action against our directors and us, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, which has persuasive, but not binding, authority on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedents in some jurisdictions in the United States. In particular, because the Cayman Islands law has no legislation specifically dedicated to the rights of investors in securities, and thus no statutorily defined private causes of action to investors in securities such as those found under the Securities Act or the Exchange Act in the United States, it provides significantly less protection to investors. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action before the federal courts of the United States.

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        As a result of all of the above, our public shareholders may have more difficulty in protecting their interests through actions against our management, directors or major shareholders than would shareholders of a corporation organized in a jurisdiction in the United States.

Our management will have considerable discretion as to the use of the net proceeds to be received by us from this offering, and you may not agree with our management on these uses.

        Our management will have considerable discretion in the application of the net proceeds received by us. You will not have the opportunity, as part of your investment decision, to assess whether proceeds are being used appropriately. You must rely on the judgment of our management regarding the application of the net proceeds of this offering. The net proceeds may be used for general corporate purposes that do not improve our profitability or increase our share price. The net proceeds from this offering may be placed in investments that do not produce income or lose value.

Our memorandum and articles of association contain anti-takeover provisions that could discourage a third party from acquiring us, which could limit our shareholders' opportunity to sell their shares, including Class A common shares represented by our ADSs, at a premium.

        Our ninth amended and restated memorandum and articles of association, which will become effective upon completion of this offering, contain provisions that may limit the ability of others to acquire control of our company or cause us to engage in change-of-control transactions. For example, upon completion of this offering, we will adopt a dual-class voting structure that gives disproportionate voting power to Class B common shares to be held by our existing shareholders. In addition, change of control event requires an additional approval by the holders of a majority of Class A common shares voting as a separate class. We will also have a staggered board upon completion of this offering. These provisions may have the effect of depriving our shareholders of an opportunity to sell their shares at a premium over prevailing market prices by discouraging third parties from seeking to obtain control of our company in a tender offer or similar transactions.

We may be classified as a passive foreign investment company, or PFIC, which could result in adverse U.S. federal income tax consequences to U.S. Holders of our ADSs or common shares.

        We may be classified as a passive foreign investment company, or PFIC, for U.S. federal income tax purposes. Based on assumptions as to our projections of the value of our outstanding common shares and ADSs during the year, adjusted bases of our gross assets, and our use of the proceeds from the initial public offering of our ADSs and common shares and of the other cash that we will hold and generate in the ordinary course of our business throughout taxable year 2014, we do not expect to be a PFIC for the taxable year 2014 or in the foreseeable future. However, there can be no assurance that we will not be a PFIC for the taxable year 2014 or any future taxable year as PFIC status is tested each taxable year and depends on the composition of our assets and income in such taxable year. In addition, the application of the PFIC rules is subject to uncertainty in several respects, and there can be no assurance that the U.S. Internal Revenue Service will not take a contrary position. Our PFIC status for the current taxable year 2014 will not be determinable until the close of the taxable year ending December 31, 2014.

        We will be classified as a PFIC for any taxable year if either (i) at least 75% of our gross income for the taxable year is passive income or (ii) at least 50% of the value of our assets (based on the average quarterly value of the assets during the taxable year) is attributable to assets that produce or are held for the production of passive income. In determining the average percentage value of our gross assets, the aggregate value of our assets will generally be deemed to be equal to our market capitalization (determined by the sum of the aggregate value of our outstanding equity) plus our liabilities, except for a year in which we are a "controlled foreign corporation" and our shares are not publicly traded on the last day of each quarter of such year, in which case adjusted bases of our gross

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assets would be used. Therefore, a drop in the market price of our ADSs or common shares would cause a reduction in the value of our non-passive assets for purposes of the asset test. Accordingly, we would likely become a PFIC if our market capitalization were to decrease significantly while we hold substantial cash.

        If we are classified as a PFIC in any taxable year in which you hold our ADSs or common shares, and you are a U.S. Holder (as defined in "Taxation—United States federal income taxation"), you would generally be subject to additional taxes and interest charges on certain "excess" distributions we make and on any gain recognized on the disposition or deemed disposition of your ADSs or common shares in a later year, even if we are not a PFIC in the year of disposition or distribution. Moreover, if we are classified as a PFIC in any taxable year in which you hold our ADSs or common shares, certain non-corporate U.S. shareholders would not be able to benefit from any preferential tax rate with respect to any dividend distribution received from us in that year or in the following year. Finally, you would also be subject to special U.S. tax reporting requirements. For more information on the U.S. tax consequences to you that would result from our classification as a PFIC, see "Taxation—United States federal income taxation—Passive foreign investment company."

We are exempt from certain corporate governance requirements of the NYSE. This may afford less protection to the holders of our ADSs.

        We are exempt from certain corporate governance requirements of the NYSE by virtue of being a foreign private issuer. As a foreign private issuer, we are permitted to, and plan to, follow home country practice in lieu of certain corporate governance requirements of the NYSE. We are required to provide a brief description of the significant differences between the corporate governance practices of our home country, the Cayman Islands and the corporate governance practices required to be followed by U.S. domestic companies under the NYSE rules. The standards applicable to us are considerably different than the standards applied to U.S. domestic issuers. The significantly different standards applicable to us do not require us to:

    have a majority of the board be independent (other than due to the requirements for the audit committee under the Exchange Act);

    have a minimum of three members on our audit committee;

    have a compensation committee, a nominating or corporate governance committee;

    provide annual certification by our chief executive officer that he or she is not aware of any noncompliance with any corporate governance rules of the NYSE;

    have regularly scheduled executive sessions with only non-management directors;

    have at least one executive session of solely independent directors each year;

    seek shareholder approval for (i) the implementation and material revisions of the terms of share incentive plans, (ii) the issuance of more than 1% of our outstanding common shares or 1% of the voting power outstanding to a related party, (iii) the issuance of more than 20% of our outstanding common shares, and (iv) an issuance that would result in a change of control;

    adopt and disclose corporate governance guidelines; or

    adopt and disclose a code of business conduct and ethics for directors, officers and employees.

        We intend to rely on all such exemptions provided by the NYSE to a foreign private issuer, except that we plan to establish a compensation committee and a corporate governance and nominating committee, we will have an audit committee consisting of three members, and we have adopted and disclosed corporate governance guidelines and a code of business conduct and ethics for directors, officers and employees. As a result, you may not be provided with the benefits of certain corporate governance requirements of the NYSE.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

        This prospectus contains forward-looking statements that reflect our current expectations and views of future events. The forward looking statements are contained principally in the sections entitled "Prospectus Summary," "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Industry" and "Business." Known and unknown risks, uncertainties and other factors may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements.

        You can identify some of these forward-looking statements by words or phrases such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "is/are likely to," "is projected to" or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include statements relating to, among other things:

    our growth strategies and initiatives and our business plans;

    the anticipated growth of our business;

    our future business development, results of operations and financial condition;

    factors that may affect our future revenues and expenses;

    the future growth of our industry as a whole;

    trends and competition in our industry; and

    economic, regulatory, operating conditions and demographic trends in China.

        These forward-looking statements involve various risks and uncertainties. Although we believe that our expectations expressed in these forward-looking statements are reasonable, our expectations may later be found to be incorrect. Our actual results could be materially different from our expectations. Moreover, we operate in a continuously evolving environment. Additional risks and uncertainties that we have not considered or currently deem to be immaterial may adversely affect us. We cannot assess the impact of all risks on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. You should thoroughly read this prospectus and the documents that we refer to with the understanding that our actual future results may be materially different from and worse than what we expect. We qualify all of our forward-looking statements by these cautionary statements.

        This prospectus also contains certain data and information, which we obtained from various government and private publications, including the Frost & Sullivan Report commissioned by us for purposes of this offering. Although we believe that the publications and reports are reliable, we have not independently verified the data. Statistical data in these publications includes projections that are based on a number of assumptions. If any one or more of the assumptions underlying the market data is later found to be incorrect, actual results may differ from the projections based on these assumptions.

        The forward-looking statements made in this prospectus relate only to events or information as of the date on which the statements are made in this prospectus. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this prospectus and the documents that we refer to in this prospectus completely and with the understanding that our actual future results may be materially different from what we expect.

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USE OF PROCEEDS

        We estimate that we will receive net proceeds from this offering of approximately US$113.3 million, or approximately US$131.4 million if the underwriters exercise their option to purchase additional ADSs in full, after deducting underwriting discounts and the estimated offering expenses payable by us. These estimates are based upon an assumed initial public offering price of US$13.00 per ADS, the mid-point of the initial public offering price range shown on the front cover of this prospectus. In addition, we expect to receive net proceeds of approximately US$50.0 million from the concurrent private placement.

        A US$1.00 increase (decrease) in the assumed initial public offering price would increase (decrease) the net proceeds of this offering to us by US$9.3 million or US$10.7 million if the underwriters exercise their option to purchase additional ADSs in full after deducting underwriting discounts and commissions and the estimated offering expenses payable by us.

        We intend to use the net proceeds from this offering and the concurrent private placement as follows:

    approximately US$120 million to expand our fleet;

    approximately US$20 million to expand our service network; and

    the remainder for general corporate purposes, including working capital and funding potential acquisition of complementary businesses, although we are not currently negotiating any such transactions.

        The foregoing represents our current intentions to use and allocate the net proceeds of this offering and the concurrent private placement based upon our present plans and business conditions. Our management, however, will have significant flexibility and discretion to apply the net proceeds from this offering and the concurrent private placement. If an unforeseen event occurs or business conditions change, we may use the proceeds from this offering and the concurrent private placement differently than as described in this prospectus.

        Pending any use of the net proceeds as described above, we plan to invest the net proceeds we receive from this offering and the concurrent private placement in short-term debt instruments or demand deposits.

        In using the proceeds from this offering and the concurrent private placement, as an offshore holding company, we are permitted under PRC laws and regulations to provide funding to our PRC subsidiaries only through loans or capital contributions. Subject to satisfaction of applicable government registration and approval requirements, we may extend inter-company loans to our PRC subsidiaries or make additional capital contributions to our PRC subsidiaries to fund their respective capital expenditures or working capital. We cannot assure you that we will be able to obtain these government registrations or approvals on a timely basis, if at all. See "Risk Factors—Risks related to doing business in China—PRC regulations of loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using the proceeds of this offering to make loans or additional capital contributions to our PRC operating subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business."

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DIVIDEND POLICY

        We have not declared or paid any dividends, and do not have any present plan to declare and pay cash dividends on our common shares in the foreseeable future. Our board of directors has complete discretion as to whether to declare and pay dividends. Even if our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the board of directors may deem relevant.

        We are a holding company incorporated in the Cayman Islands. In order to pay dividends, if any, to our shareholders, we will rely on dividends from our subsidiaries in China. Current PRC regulations permit our subsidiaries to pay dividends to us only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, each of our subsidiaries in China is required to set aside a certain amount of its accumulated after-tax profits each year, if any, to fund certain statutory reserves. These reserves may not be distributed as cash dividends. Furthermore, if our subsidiaries in China incur debt on their own behalf, the instruments governing the debt may restrict their ability to pay dividends or make other payments to us.

        If we pay dividends, the depositary will pay you the dividends it receives on our Class A common shares, after deducting any withholding taxes and its fees and expenses. See "Description of American Depositary Shares." Cash dividends on our common shares, if any, will be paid in U.S. dollars.

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CAPITALIZATION

        The following table sets forth our capitalization as of June 30, 2014:

    on an actual basis;

    on a pro forma basis to reflect (i) the re-designation of all of our issued and outstanding common shares as of June 30, 2014 into 6,096,842 Class B common shares and the automatic conversion and re-designation of all of our issued and outstanding Class A and Series A, B, C, D and E preferred shares as of June 30, 2014 into 77,999,069 Class B common shares immediately prior to the completion of this offering and (ii) the exercise of 1,500,000 warrants by Crawford to purchase 1,500,000 common shares on October 31, 2014 and the re-designation of such common shares into 1,500,000 Class B common shares immediately prior to the completion of this offering;

    on a pro forma as adjusted basis to reflect (i) the re-designation of all of our issued and outstanding common shares as of June 30, 2014 into 6,096,842 Class B common shares and the automatic conversion and re-designation of all of our issued and outstanding Class A and Series A, B, C, D and E preferred shares as of June 30, 2014 into 77,999,069 Class B common shares immediately prior to the completion of this offering, (ii) the exercise of 1,500,000 warrants by Crawford to purchase 1,500,000 common shares on October 31, 2014 and the re-designation of such common shares into 1,500,000 Class B common shares immediately prior to the completion of this offering, (iii) the issuance and sale of 20,000,000 Class A common shares represented by 10,000,000 ADSs by us in this offering at an assumed initial public offering price of US$13.00 per ADS, the mid-point of the estimated public offering price range set forth on the front cover of this prospectus, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us and assuming no exercise of the underwriter's option to purchase additional ADSs, and (iv) the issuance and sale of a total of 7,692,306 Class A common shares to the investors in the concurrent private placement at an assumed initial public offering price of US$13.00 per ADS, the mid-point of the estimated public offering price range set forth on the front cover of this prospectus.

        You should read this table together with our consolidated financial statements and the related notes included elsewhere in this prospectus and the information under "Management's Discussion and Analysis of Financial Condition and Results of Operations."


 
  As of June 30, 2014  
 
  Actual   Pro forma(1)   Pro forma
as adjusted(1)
 
 
  (in thousands of US$)
 

Long-term Borrowings

                   

Long-term bank borrowing guaranteed by a third party guarantee agent

    10,961     10,961     10,961  

Long-term borrowings

    96,316     96,316     96,316  
               

Total long-term borrowings

    107,277     107,277     107,277  
               
               

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  As of June 30, 2014  
 
  Actual   Pro forma(1)   Pro forma
as adjusted(1)
 
 
  (in thousands of US$)
 

Mezzanine Equity

                   

Class A convertible redeemable preferred shares (US$0.001 par value; 10,427,373 shares authorized; 10,427,373 issued and outstanding on an actual basis; none outstanding on a pro forma or pro forma as adjusted basis)

    49,614          

Series A convertible redeemable preferred shares (US$0.001 par value; 5,000,000 shares authorized; 5,000,000 shares issued and outstanding on an actual basis; none outstanding on a pro forma or pro forma as adjusted basis)

    10,992          

Series B convertible redeemable preferred shares (US$0.001 par value; 12,123,314 shares authorized; 12,123,314 shares issued and outstanding on an actual basis; none outstanding on a pro forma or pro forma as adjusted basis)

    53,035          

Series C convertible redeemable preferred shares (US$0.001 par value; 18,721,302 shares authorized; 17,348,382 shares issued and outstanding on an actual basis; none outstanding on a pro forma or pro forma as adjusted basis)

    99,457          

Series D convertible redeemable preferred shares (US$0.001 par value; 10,000,000 shares authorized; 10,000,000 issued and outstanding on an actual basis; none outstanding on a pro forma or pro forma as adjusted basis)

    65,416          

Series E convertible redeemable preferred shares (US$0.001 par value; 23,100,000 shares authorized; 23,100,000 issued and outstanding on an actual basis; none outstanding on a pro forma or pro forma as adjusted basis)

    134,677          
               

Total mezzanine equity

    413,191          

Shareholders' Equity (Deficit)

   
 
   
 
   
 
 

Common shares (US$0.001 par value; 425,173,466 common shares authorized, 6,096,842 common shares issued and outstanding on an actual basis; nil issued and outstanding on a pro forma or pro forma as adjusted basis)

    6          

Class A common shares (US$0.001 par value; nil issued and outstanding on a pro forma basis; 27,692,306 shares issued and outstanding on a pro forma as adjusted basis)

            28  

Class B common shares (US$0.001 par value; 85,595,911 shares issued and outstanding on a pro forma and pro forma as adjusted basis)

        85     85  

Additional paid-in capital

        421,286     584,561  

Accumulated other comprehensive income

    1,180     1,180     1,180  

Accumulated deficit

    (180,129 )   (180,129 )   (180,129 )
               

Total shareholders' equity (deficit)(2)

    (178,943 )   242,422     405,725  
               

Total mezzanine equity and shareholders' equity (deficit)(2)

    234,248     242,422     405,725  
               
               

(1)
The pro forma and pro forma as adjusted information discussed above is illustrative only. Our total shareholders' equity and total capitalization following the completion of this offering are subject to adjustment based on the actual initial public offering price and other terms of this offering determined at pricing. Pro forma as adjusted numbers assumes that the underwriters will not exercise their option to purchase additional ADSs.

(2)
Assuming the number of ADSs offered by us as set forth on the front cover of this prospectus remains the same, and after deduction of underwriting discounts and commissions and the estimated offering expenses payable by us, a US$1.00 change in the assumed initial public offering price of US$13.00 per ADS, the mid-point of the estimated public offering price range shown on the front cover of this prospectus, would, in the case of an increase, increase and, in the case of a decrease, decrease each of total shareholders' equity and total capitalization by US$9.3 million.

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DILUTION

        If you invest in our ADSs, your interest will be diluted for each ADS you purchase to the extent of the difference between the initial public offering price per ADS and our net tangible book value per ADS immediately after this offering. Dilution results from the fact that the initial public offering price per common share is substantially in excess of the net tangible book value per share attributable to the existing shareholders for our presently outstanding common shares and our Class A and Series A, B, C, D and E preferred shares which will automatically convert into our Class B common shares immediately prior to the completion of this offering.

        Our net tangible book value as of June 30, 2014 was approximately US$229.0 million, or US$37.55 per common share and US$75.10 per ADS as of that date. Net tangible book value represents the amount of our total consolidated assets, minus the amount of our total consolidated liabilities and intangible assets. Dilution is determined by subtracting net tangible book value per common share, after giving effect to (i) the automatic conversion and re-designation of all outstanding Class A and Series A, B, C, D and E preferred shares into Class B common shares immediately prior to the completion of this offering, (ii) the additional proceeds we received from the exercise of 1,500,000 warrants by Crawford to purchase 1,500,000 common shares on October 31, 2014, and (iii) the additional proceeds we will receive (A) from this offering after deducting underwriting discounts and commissions and estimated offering expenses payable by us and (B) from the concurrent private placement.

        Without taking into account any other changes in net tangible book value after June 30, 2014, other than giving effect to the automatic conversion and re-designation of all outstanding Class A and Series A, B, C, D and E preferred shares into Class B common shares immediately prior to the completion of this offering, our sale of the ADSs offered in this offering at the assumed initial public offering price of US$13.00 per ADS, the mid-point of the estimated initial public offering price range set forth on the front cover of this prospectus, after deduction of the underwriting discounts and commissions and estimated offering expenses payable by us, and our issuance and sale of a total of 7,692,306 Class A common shares to the investors in the concurrent private placement at an assumed initial public offering price of US$13.00 per ADS, the mid-point of the estimated public offering price range set forth on the front cover of this prospectus, our pro forma as adjusted net tangible book value as of June 30, 2014 would have been US$400.5 million, or US$3.54 per common share and US$7.08 per ADS. This represents an immediate increase in net tangible book value of US$0.77 per common share and US$1.54 per ADS, to the existing shareholders and an immediate dilution in net tangible book value of US$2.96 per common share and US$5.92 per ADS, to investors purchasing ADSs in this offering. The following table illustrates such dilution:

 
  Per Common
Share
  Per ADS  

Assumed initial public offering price

  US$ 6.50   US$ 13.00  

Net tangible book value as of June 30, 2014

  US$ 37.55   US$ 75.10  

Pro forma net tangible book value after giving effect to the conversion and re-designation of Class A and Series A, B, C, D and E preferred shares and the exercise of 1,500,000 warrants by Crawford to purchase 1,500,000 common shares on October 31, 2014

  US$ 2.77   US$ 5.54  

Pro forma as adjusted net tangible book value after giving effect to the conversion and re-designation of all outstanding Class A and Series A, B, C, D and E preferred shares, and the exercise of 1,500,000 warrants by Crawford to purchase 1,500,000 common shares on October 31, 2014, this offering and the concurrent private placement

  US$ 3.54   US$ 7.08  

Amount of dilution in pro forma as adjusted net tangible book value to new investors in the offering

  US$ 2.96   US$ 5.92  

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        A US$1.00 increase (decrease) in the assumed public offering price of US$13.00 per ADS would increase (decrease) our pro forma as adjusted net tangible book value after giving effect to the offering by US$9.3 million, the pro forma as adjusted net tangible book value per common share and per ADS after giving effect to this offering and the concurrent private placement by US$0.10 per common share and US$0.20 per ADS and the dilution in pro forma as adjusted net tangible book value per common share and per ADS to new investors in this offering by US$0.40 per common share and US$0.80 per ADS, assuming no charge to the number of ADSs offered by us as set forth on the front cover of this prospectus, and after deducting underwriting discounts and commissions and other offering expenses.

        The following table summarizes, on a pro forma as adjusted basis as of June 30, 2014, the differences between existing investors and the new investors with respect to the number of common shares (in the form of ADSs or shares) purchased from us in this offering and the concurrent private placement, the total consideration paid and the average price per common share/ADS paid before deducting the underwriting discounts and commissions and estimated offering expenses. The total number of common shares does not include Class A common shares underlying the ADSs issuable upon the exercise of option to purchase additional ADSs by the underwriters.

 
  Common Shares
Purchased
   
   
   
   
 
 
  Total Consideration    
   
 
 
  Average Price
Per Common
Share
  Average Price
Per ADS
 
 
  Number   Percent   Amount   Percent  

Existing investors

    85,595,911     75.6 % US$ 312,789,861     63.5 % US$ 3.65   US$ 7.30  

New investors

    27,692,306     24.4 % US$ 180,000,000     36.5 % US$ 6.50   US$ 13.00  
                               

Total

    113,288,217     100.0 % US$ 492,789,861     100.0 %            
                               
                               

        The pro forma information discussed above is only illustrative. Our net tangible book value following the completion of this offering is subject to adjustment based on the actual initial public offering price of our ADSs and other terms of this offering determined at pricing.

        The discussion and tables above assume no exercise of any outstanding share options. As of the date of this prospectus, there are 5,520,150 common shares issuable upon exercise of outstanding share options at a weighted average exercise price of US$3.72 per share. To the extent that any of these options are exercised, there will be further dilution to new investors.

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EXCHANGE RATE INFORMATION

        Our business is conducted in China and substantially all of our revenues are denominated in RMB. However, this prospectus contains translations of RMB amounts into U.S. dollars at specific rates solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars and from U.S. dollars to RMB in this prospectus were made at a rate of RMB6.2036 to US$1.00, the exchange rate set forth in the H.10 statistical release of the Federal Reserve Board on June 30, 2014. We make no representation that any RMB or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or RMB, as the case may be, at any particular rate, the rates stated below, or at all. The PRC government imposes control over its foreign currency reserves in part through direct regulation of the conversion of RMB into foreign exchange and through restrictions on foreign trade. On October 24, 2014, the exchange rate set forth in the H.10 statistical release was RMB6.1168 to US$1.00.

        The following table sets forth information concerning exchange rates between the RMB and the U.S. dollar for the periods indicated. These rates are provided solely for your convenience and are not necessarily the exchange rates that we used in this prospectus or will use in the preparation of our periodic reports or any other information to be provided to you. For January 1, 2009 and all later dates and periods, the exchange rate refers to the exchange rate as set forth in the H.10 statistical release of the Federal Reserve Board.

 
  Noon buying rate  
Period
  Period End   Average(1)   Low   High  
 
  (RMB per U.S. Dollar)
 

2009

    6.8259     6.8295     6.8470     6.8176  

2010

    6.6000     6.7603     6.8330     6.6000  

2011

    6.2939     6.4475     6.6364     6.2939  

2012

    6.2301     6.2990     6.3879     6.2221  

2013

    6.0537     6.1412     6.2438     6.0537  

2014

                         

April

    6.2591     6.2246     6.2591     6.1966  

May

    6.2471     6.2380     6.2591     6.2255  

June

    6.2036     6.2306     6.2548     6.2036  

July

    6.1737     6.1984     6.2115     6.1712  

August

    6.1430     6.1541     6.1793     6.1395  

September

    6.1380     6.1382     6.1495     6.1266  

October (through October 24, 2014)

    6.1168     6.1285     6.1385     6.1168  

Source: Federal Reserve Statistical Release

(1)
Annual averages are calculated using the average of the exchange rates on the last business day of each month during the relevant year. Monthly averages are calculated using the average of the daily rates during the relevant month.

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ENFORCEABILITY OF CIVIL LIABILITIES

        We are incorporated in the Cayman Islands to take advantage of certain benefits associated with being a Cayman Islands exempted company, such as:

    political and economic stability;

    an effective judicial system, which we believe will reach and enforce legal judgments in accordance with the law of the Cayman Islands in a relatively reliable fashion;

    a favorable tax system;

    the absence of exchange control or currency restrictions; and

    the availability of professional and support services.

        However, certain disadvantages accompany incorporation in the Cayman Islands. These disadvantages include:

    the Cayman Islands has a less developed body of securities laws as compared to the United States and those securities laws provide significantly less protection to investors; and

    Cayman Islands' companies may not have standing to sue before the federal courts of the United States.

        Our constituent documents do not contain provisions requiring that disputes, including those arising under the securities laws of the United States, between us, our officers, directors and shareholders, be subject to arbitration.

        Substantially all of our current operations are conducted in China, and substantially all of our assets are located in China. A majority of our directors and officers are nationals or residents of jurisdictions other than the United States, and a substantial portion of their assets are located outside the United States. As a result, it may be difficult for a shareholder to effect service of process within the United States upon these persons, or to enforce against us or them judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States.

        We have appointed Law Debenture Corporate Services Inc. as our agent to receive service of process with respect to any action brought against us in the United States District Court for the Southern District of New York under the federal securities laws of the United States or of any state in the United States or any action brought against us in the Supreme Court of the State of New York in the County of New York under the securities laws of the State of New York.

        Maples and Calder, our counsel as to Cayman Islands law, and Grandall Law Firm (Shanghai), our counsel as to PRC law, have advised us, respectively, that there is uncertainty as to whether the courts of the Cayman Islands and/or the PRC, respectively, would:

    recognize or enforce judgments of United States courts obtained against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States; or

    entertain original actions brought in each respective jurisdiction against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States.

        Maples and Calder has further advised us that although there is no statutory enforcement in the Cayman Islands of judgments obtained in the federal or state courts of the United States (and the Cayman Islands are not a party to any treaties for the reciprocal enforcement or recognition of such judgments), a judgment obtained in such jurisdiction will be recognized and enforced in the courts of

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the Cayman Islands at common law, without any re-examination of the merits of the underlying dispute, by an action commenced on the foreign judgment debt in the Grand Court of the Cayman Islands, provided such judgment (i) is given by a foreign court of competent jurisdiction, (ii) imposes on the judgment debtor a liability to pay a liquidated sum for which the judgment has been given, (iii) is final, (iv) is not in respect of taxes, a fine or a penalty, and (v) was not obtained in a manner and is not of a kind the enforcement of which is contrary to natural justice or the public policy of the Cayman Islands. There are currently no treaties or reciprocal agreements made between the Cayman Islands and the PRC or the United States that allow enforcement of foreign judgments without having to commence proceedings in the Cayman Islands. Our shareholders may, in certain circumstances, originate actions against us or our directors; see "Description of Share Capital—Differences in corporate law—Shareholders' suits."

        Grandall Law Firm (Shanghai) has further advised us that the recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law. PRC courts may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedures Law based either on treaties between the PRC and the country or region where the judgment is made or on principle of reciprocity between jurisdictions. China does not have any treaties or other agreements that provide for the reciprocal recognition and enforcement of foreign judgments with the United States or the Cayman Islands. In addition, according to the PRC Civil Procedures Law, courts in the PRC will not enforce a foreign judgment against us or our directors and officers if they decide that the judgment violates the basic principles of PRC law or national sovereignty, security or public interest. Accordingly, it is uncertain whether a PRC court would enforce a judgment rendered by a court in the United States or the Cayman Islands. In addition, it will be difficult for U.S. shareholders to originate actions against us in the PRC, because we are incorporated under the laws of the Cayman Islands and it is difficult for U.S. shareholders, by virtue of holding our ADSs or common shares, to establish a factual connection to the PRC and it is uncertain whether a PRC court would be competent to have the subject matter jurisdiction.

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OUR CORPORATE HISTORY AND STRUCTURE

Our history

        We commenced our business in 2006, which was initially focused on providing car services to premium corporate clients. In 2008, we began to provide car rentals to individual customers. Our company, eHi Car Services Limited (previously known as Prudent Choice International Limited or eHi Auto Services Limited), was incorporated in the Cayman Islands on August 3, 2007. eHi Car Services Limited is a holding company. Currently we operate our car rentals business primarily through our PRC subsidiaries eHi Rental and eHi Jiangsu, and their subsidiaries and branches.

        In March 2008, eHi Rental was established in China by two nominee shareholders designated by Mr. Ray Ruiping Zhang to engage in, among other things, car rentals. Also in March 2008, we established our first wholly foreign owned subsidiary Shuzhi Information Technology (Shanghai) Co., Ltd., or Shuzhi, in China. In November 2009, Shuzhi acquired the 94.13% equity interest of eHi Rental, and two nominee shareholders designated by Shuzhi acquired the remaining 5.87% equity interest of eHi Rental.

        On September 24, 2010, we acquired all the shares of eHi Auto Services (Hong Kong) Holding Limited, or eHi Hong Kong, a then dormant company incorporated in Hong Kong, and became its sole shareholder. In January 2011, Shuzhi and eHi Hong Kong completed a share transfer and capital increase of eHi Rental, upon which eHi Hong Kong acquired the 5.87% equity interest of eHi Rental from the two nominee shareholders designated by Shuzhi and subscribed for the increased registered capital in eHi Rental by contributing an additional US$25,185,185. As a result, eHi Rental was converted into a Sino foreign joint venture enterprise with 65.14% equity interest held by eHi Hong Kong and the remaining 34.86% equity interest held by Shuzhi. In July 2011, the registered capital of eHi Rental was increased to US$100 million, and in May 2012, the registered capital of eHi Rental was further increased to US$130 million. eHi Hong Kong has fully subscribed to this increased registered capital of US$30 million. eHi Hong Kong and Shuzhi currently hold 79.27% and 20.73% equity interests of eHi Rental, respectively.

        On December 23, 2011, we established our second wholly foreign owned subsidiary, eHi Jiangsu, in China. eHi Jiangsu is wholly owned by eHi Hong Kong. We have, through eHi Rental and eHi Jiangsu, established and acquired several subsidiaries in various regions in China to expand the geographic coverage of our business operations. We plan to establish more subsidiaries and branches providing car renals through eHi Rental and eHi Jiangsu in the future.

        In connection with our car services business, we provide vehicles and chauffeur services through different subsidiaries under separate contracts. We provide vehicles through eHi Rental and eHi Jiangsu as well as their subsidiaries and branches, and provide chauffeur services through Shanghai Smart Brand, which was established by Shuzhi on April 13, 2011. Several subsidiaries and branches of Shanghai Smart Brand were also established to provide chauffeur services in various regions in China.

        Our current operations are not subject to the ICP license requirements. In March 2014, we entered into a series of contractual arrangements with our PRC incorporated variable interest entity eHi Information, and its shareholders to further expand our Internet and mobile services. Such contractual arrangements enable us to exercise effective control over the operations of eHi Information which resulted in the consolidation of eHi Information by eHi Rental. eHi Information obtained the ICP license from the relevant telecommunication authorities on September 24, 2014. eHi Information currently does not have any operation and we do not expect eHi Information to contribute a material portion of our net revenues and operations in the foreseeable future.

        On October 17, 2013, we established L&L Financial Leasing Holding Limited, or L&L, in Hong Kong through eHi Hong Kong, which is a holding company of Shanghai Taihao Financial Leasing Co., or Shanghai Taihao. Shanghai Taihao is authorized to operate financial leasing business in China.

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        On April 21, 2014, we, through our wholly owned subsidiary, Elite Plus Developments Limited, or Elite Plus, invested US$25 million for subscribing series B preferred shares of Travice Inc., which developed and operates Kuaidi mobile taxi and car calling service provider, representing 8.4% of the then outstanding share capital of Travice Inc. Travice Inc. also issued a warrant to Elite Plus to purchase additional 4,684,074 series C preferred shares of Travice Inc.

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Our corporate structure

        The following diagram illustrates our anticipated shareholding, voting and principal corporate structure immediately after the completion of this offering, assuming (i) the underwriters do not exercise their option to purchase additional ADSs and (ii) the issuance and sale of 7,692,306 Class A common shares in the concurrent private placement based on the assumed initial public offering price of US$13.00 per ADS, the mid-point of the estimated initial public offering price range shown on the front cover of this prospectus:

GRAPHIC


(1)
Consists of 86,045,911 Class B common shares and 7,692,306 Class A common shares.

(2)
Consists of 20,000,000 Class A common shares.

(3)
eHi Information is a variable interest entity incorporated in China and is 50% owned by Mr. Hongtao Han and 50% owned by Mr. Chun Xie. We effectively control eHi Information through contractual arrangements.

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SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA

        The following selected consolidated statements of comprehensive loss data for the years ended December 31, 2012 and 2013 and the consolidated balance sheets data as of December 31, 2012 and 2013 have been derived from our audited consolidated financial statements included elsewhere in this prospectus.

        The following selected consolidated statements of comprehensive loss data for the six months ended June 30, 2013 and 2014 and selected consolidated balance sheets data as of June 30, 2014 have been derived from our unaudited interim condensed consolidated financial statements included elsewhere in this prospectus. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as our audited consolidated financial statements and include all adjustments, consisting only of normal and recurring adjustments, that we consider necessary for a fair statement of our financial position and operating results for the periods presented.

        Our consolidated financial statements are prepared and presented in accordance with U.S. GAAP. Our historical results do not necessarily indicate our results expected for any future periods. Our selected consolidated financial data also includes certain non-GAAP financial measures, which are not required by, or presented in accordance with, U.S. GAAP, but are included because we believe they are indicative of our operating performance and are used by investors and analysts to evaluate companies in our industry. The following selected consolidated financial data should be read in conjunction with, and are qualified in their entirety by reference to, our consolidated financial statements and the related

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notes, and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus.

 
  For the Year Ended December 31,   For the Six Months Ended June 30,  
 
  2012   2013   2013   2014  
 
  RMB   % of Net
Revenues
  RMB   US$   % of Net
Revenues
  RMB   % of Net
Revenues
  RMB   US$   % of Net
Revenues
 
 
  (in thousands, except percentages, share and per share data)
 

Selected consolidated statements of comprehensive loss data

                                                             

Net revenues

    450,085     100.0 %   566,394     91,301     100.0 %   260,656     100.0 %   384,538     61,986     100.0 %

Vehicle operating expenses(1)

    (432,448 )   (96.1 )   (526,446 )   (84,861 )   (92.9 )   (237,915 )   (91.3 )   (316,013 )   (50,940 )   (82.2 )

Selling and marketing expenses(1)

    (38,209 )   (8.5 )   (40,439 )   (6,519 )   (7.1 )   (18,140 )   (7.0 )   (16,027 )   (2,583 )   (4.2 )

General and administrative expenses(1)

    (94,431 )   (21.0 )   (112,416 )   (18,121 )   (19.8 )   (56,116 )   (21.5 )   (55,963 )   (9,021 )   (14.6 )

Other operating income

    11,041     2.5     13,549     2,184     2.3     1,894     0.7     12,682     2,044     3.3  
                                           

Total operating expenses

    (554,047 )   (123.1 )   (665,752 )   (107,317 )   (117.5 )   (310,277 )   (119.1 )   (375,321 )   (60,500 )   (97.7 )
                                           

Profit/(Loss) from operations

    (103,962 )   (23.1 )   (99,358 )   (16,016 )   (17.5 )   (49,621 )   (19.1 )   9,217     1,486     2.3  
                                           

Interest income

    1,146     0.3     360     58     0.1     201     0.1     2,832     456     0.7  

Interest expense

    (66,636 )   (14.8 )   (50,880 )   (8,202 )   (9.0 )   (34,535 )   (13.2 )   (30,954 )   (4,989 )   (8.0 )

Other income (expenses), net

    (1,046 )   (0.3 )   (1,108 )   (178 )   (0.3 )   (380 )   (0.1 )   (397 )   (64 )   (0.1 )
                                           

Loss before income taxes

    (170,498 )   (37.9 )   (150,986 )   (24,338 )   (26.7 )   (84,335 )   (32.3 )   (19,302 )   (3,111 )   (5.1 )
                                           

Provision for income taxes

    (5,212 )   (1.1 )   (1,228 )   (198 )   (0.2 )   (695 )   (0.3 )   (1,384 )   (223 )   (0.4 )

Net loss

    (175,710 )   (39.0 )   (152,214 )   (24,536 )   (26.9 )   (85,030 )   (32.6 )   (20,686 )   (3,334 )   (5.5 )

Accretion on convertible redeemable preferred shares to redemption value

    (155,053 )   (34.5 )   (191,135 )   (30,810 )   (33.7 )   (94,064 )   (36.1 )   (135,753 )   (21,883 )   (35.3 )

Deemed contribution from preferred shareholders at extinguishment of convertible bonds

            16,751     2,700     3.0                      

Deemed dividends to preferred shareholders at extinguishment of convertible bonds and promissory note

            (44,164 )   (7,119 )   (7.8 )                    

Modification of warrants

            (1,021 )   (165 )   (0.2 )                    
                                           

Net loss attributable to common shareholders

    (330,763 )   (73.5 )   (371,783 )   (59,930 )   (65.6 )   (179,094 )   (68.7 )   (156,439 )   (25,217 )   (40.8 )
                                           
                                           

Weighted average number of common shares used in computing net loss per share—basic and diluted

    6,096,842           6,096,842     6,096,842           6,096,842           6,096,842     6,096,842        

Net loss per common share attributable to common shareholders—basic and diluted

    (54.25 )         (60.98 )   (9.83 )         (29.37 )         (25.66 )   (4.14 )      

Adjusted EBITDA(2)

   
68,882
   
15.3
   
102,061
   
16,452
   
18.0
   
45,688
   
17.5
   
133,030
   
21,444
   
34.6
 

(1)
Include share-based compensation charges of RMB6.7 million and RMB6.2 million (US$1.0 million) in 2012 and 2013, respectively, and RMB3.3 million and RMB2.3 million (US$0.4 million) in the six months ended June 30, 2013 and 2014, respectively, allocated as follows:

   
  For the Year Ended December 31,   For the Six Months Ended June 30,  
   
  2012   2013   2013   2014  
   
  RMB   RMB   US$   RMB   RMB   US$  
   
  (in thousands)
 
 

Vehicle operating expenses

    81     29     5     7     7     1  
 

Selling and marketing expense

    35     9     1     58     51     8  
 

General and administrative expenses

    6,567     6,168     994     3,218     2,203     356  
                             
 
 

Total share-based compensation expense

    6,683     6,206     1,000     3,283     2,261     365  
                             
 
 
                             
(2)
See "—Non-GAAP financial measure".

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  As of December 31,   As of June 30,  
 
  2012   2013   2014  
 
  RMB   RMB   US$   RMB   US$   RMB   US$   RMB   US$  
 
   
   
   
   
   
  Pro forma(1)
  Pro forma as adjusted(2)
 
 
  (in thousands)
 

Selected consolidated balance sheets data

                                                       

Cash and cash equivalents

    133,453     630,733     101,672     318,083     51,274     368,789     59,448     1,381,855     222,751  

Total current assets

    239,192     803,742     129,561     623,297     100,473     674,003     108,647     1,687,069     271,950  

Cost method investment

                153,820     24,795     153,820     24,795     153,820     24,795  

Property and equipment, net

    844,380     1,062,331     171,244     1,412,713     227,725     1,412,713     227,725     1,412,713     227,725  

Vehicle purchase deposits

        119,173     19,210     193,352     31,168     193,352     31,168     193,352     31,168  

Total assets

    1,116,659     2,026,422     326,652     2,435,023     392,518     2,485,728     400,692     3,498,794     563,995  

Short-term borrowings

    171,823     219,640     35,405     346,446     55,846     346,446     55,846     346,446     55,846  

Total current liabilities

    531,773     333,475     53,755     441,591     71,183     441,591     71,183     441,591     71,183  

Long-term borrowings

    6,483     375,726     60,566     540,216     87,081     540,216     87,081     540,216     87,081  

Total liabilities

    543,506     709,552     114,377     981,842     158,270     981,842     158,270     981,842     158,270  

Total mezzanine equity

    1,169,640     2,273,521     366,484     2,563,271     413,191                  

Total shareholders' equity (deficits)

    (596,487 )   (956,651 )   (154,209 )   (1,110,090 )   (178,943 )   1,503,886     242,422     2,516,952     405,725  

(1)
The pro forma balance sheet information as of June 30, 2014 assumes (i) the re-designation of all of our issued and outstanding common shares as of June 30, 2014 into 6,096,842 Class B common shares and the automatic conversion and re-designation of all of our issued and outstanding preferred shares as of June 30, 2014 into 77,999,069 Class B common shares immediately prior to the completion of this offering; and (ii) the exercise of 1,500,000 warrants by Crawford to purchase 1,500,000 common shares on October 31, 2014 and the re-designation of such common shares into 1,500,000 Class B common shares immediately prior to the completion of this offering.

(2)
The pro forma as adjusted balance sheet information as of June 30, 2014 assumes (i) the re-designation of all of our issued and outstanding common shares as of June 30, 2014 into 6,096,842 Class B common shares and the automatic conversion and re-designation of all of our issued and outstanding preferred shares as of June 30, 2014 into 77,999,069 Class B common shares immediately prior to the completion of this offering; (ii) the exercise of 1,500,000 warrants by Crawford to purchase 1,500,000 common shares on October 31, 2014 and the re-designation of such common shares into 1,500,000 Class B common shares immediately prior to the completion of this offering; and (iii) the net proceeds we will receive in this offering and the concurrent private placement.

Non-GAAP financial measure

        To supplement our consolidated financial statements which are presented in accordance with U.S. GAAP, we use adjusted EBITDA as a non-GAAP financial measure. Adjusted EBITDA represents net income or loss before depreciation and amortization, share-based compensation, interest expenses, interest income and provision for income taxes. We present adjusted EBITDA because it is used by our management to evaluate our operating and financial performance. We also believe that adjusted EBITDA provides useful information to investors and others in understanding and evaluating our consolidated results of operations in the same manner as our management and in comparing financial results across accounting periods.

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        The following table reconciles our adjusted EBITDA in 2012 and 2013, and for the six months ended June 30, 2013 and 2014, to the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP, which is net loss:

 
  For the Year Ended December 31,   For the Six Months Ended June 30,  
 
  2012   2013   2013   2014  
 
  RMB   RMB   US$   RMB   RMB   US$  
 
  (in thousands)
 

Net loss

    (175,710 )   (152,214 )   (24,536 )   (85,030 )   (20,686 )   (3,334 )

Add (subtract):

                                     

Depreciation and amortization

    167,207     196,321     31,646     92,406     121,949     19,657  

Share-based compensation

    6,683     6,206     1,000     3,283     2,261     365  

Interest expenses

    66,636     50,880     8,202     34,535     30,954     4,989  

Interest income

    (1,146 )   (360 )   (58 )   (201 )   (2,832 )   (456 )

Provision for income taxes

    5,212     1,228     198     695     1,384     223  
                           

Adjusted EBITDA

    68,882     102,061     16,452     45,688     133,030     21,444  
                           
                           

        The use of adjusted EBITDA has certain limitations because it does not reflect all items of income and expense that affect our operations. Items excluded from adjusted EBITDA are significant components in understanding and assessing our operating and financial performance. Depreciation and amortization, share-based compensation, interest expenses, interest income and provision for income taxes have been and may continue to be incurred in our business and are not reflected in the presentation of adjusted EBITDA. Each of these items should also be considered in the overall evaluation of our results. Additionally, adjusted EBITDA does not consider capital expenditures and other investing activities and should not be considered as a measure of our liquidity. We reconcile this non-GAAP financial measure to the nearest U.S. GAAP performance measure, all of which should be considered when evaluating our performance. The term adjusted EBITDA is not defined under U.S. GAAP, and adjusted EBITDA is not a measure of net income or loss, operating income or loss, operating performance or liquidity presented in accordance with U.S. GAAP. When assessing our operating and financial performance, you should not consider such data in isolation or as a substitute for our net income or loss, operating income or loss or any other operating performance measure that is calculated in accordance with U.S. GAAP. Furthermore, adjusted EBITDA may differ from the non-GAAP information used by other companies, including peer companies, and therefore comparability may be limited. We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure.

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Selected operating data

        The following tables set forth our key operating metrics as of the dates and for the periods indicated:

Period-end fleet size(1)

 
  As of
December 31,
  As of
June 30,
 
 
  2012   2013   2013   2014  

Car rentals

    8,957     10,500     9,610     14,260  

Car services

    872     1,086     969     1,149  
                   

Total

    9,829     11,586     10,579     15,409  
                   
                   

(1)
"Period-end fleet size" refers to the aggregate number of vehicles in our car rentals and car services fleets as of the last day of a given period to which we hold legal title, including vehicles that we have written off in accordance with our accounting policy and vehicles that are currently missing but have not been written off. As of June 30, 2014, we had written off a total of 127 vehicles since our inception.

Car rentals and car services

 
  For the Year Ended
December 31,
  For the
Six Months Ended
June 30,
 
 
  2012   2013   2013   2014  

Average available fleet size(1)

    8,484     9,937     9,541     13,289  

RevPAC (RMB)(2)

    145     156     151     160  

Car rentals

 
  For the Year Ended
December 31,
  For the
Six Months Ended
June 30,
 
 
  2012   2013   2013   2014  

Average available fleet sizee(1)

    7,704     8,987     8,686     12,212  

RevPAC (RMB)(2)

    104     115     111     121  

Fleet utilization rate (%)(3)

    72.0     70.5     68.4     70.9  

Average daily rental rate (RMB)(4)

    145     163     163     171  

Car services

 
  For the Year Ended
December 31,
  For the
Six Months Ended
June 30,
 
 
  2012   2013   2013   2014  

Average available fleet size(1)

    780     950     855     1,077  

RevPAC (RMB)(2)

    549     546     553     600  

(1)
"Average available fleet size" is calculated by dividing the aggregate number of days in which our fleet was in operation during a given period by the total number of days during the same period. In determining the size of our fleet in operation, we include all vehicles in our car rentals and car services fleets except for vehicles that have been written off in accordance with our accounting policy and vehicles that have not been consistently made

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    available for rent and that we may consider to dispose when appropriate opportunities arise.

(2)
"RevPAC" refers to average daily net revenue per available car, which is calculated by dividing the net revenues during a given period by the aggregate number of days in which our fleet was in operation during the same period.

(3)
"Fleet utilization rate" refers to the aggregate transaction days for our car rental fleet during a given period divided by the aggregate days our car rental fleet are in operation during the same period. "Transaction days" refer to the aggregate number of days on which a vehicle in our car rental or car services fleet was on rent during a given period.

(4)
"Average daily rental rate" refers to RevPAC during a given period divided by the fleet utilization rate during the same period.

        See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Key operating metrics" for more information on our non-financial key operating metrics. There is no industry norm with respect to the calculations of these operating metrics. As a result, our operating metrics may not be comparable to those used by other industry participants.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

        You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the section entitled "Selected Consolidated Financial and Operating Data" and our consolidated financial statements and the related notes included elsewhere in this prospectus. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under "Risk Factors" and elsewhere in this prospectus.

Overview

        We are the No. 1 car services provider and No. 2 car rentals provider in China in terms of market share by revenues in 2013, according to Frost & Sullivan. The top three players in China's car rental and car service industry, including us, in aggregate accounted for 10.7% of the market share by revenues in 2013, according to Frost & Sullivan. We believe such high market fragmentation presents a strong potential for our future growth and industry consolidation.

        As of June 30, 2014, we had the broadest geographical coverage among all car rentals and car services providers in China as measured by the number of cities in which services are provided directly, according to Frost & Sullivan. From January 1, 2012 to June 30, 2014, our fleet size increased from 7,717 to 15,409, while we generally maintained a car rental fleet utilization rate of over 70% during the same period. According to Frost & Sullivan, we had the highest fleet utilization rate among the top five car rental companies in China in 2013.

        Our one-stop comprehensive services include the following:

    Car rentals.  We provide self-drive car rental services to both individual customers and corporate clients to meet their travel, leisure, business and ground transportation needs. Our short-term car rentals have a term of less than one year and are primarily provided to individual customers on a daily, weekly or monthly basis. Our long-term car rentals have a term of one year or longer and are primarily provided to corporate clients. As of June 30, 2014, our car rental fleet included 14,260 vehicles of over 200 models primarily from major automobile manufacturers. In 2013, we derived approximately 66.6% of our net revenues from car rentals.

    Car services.  We provide chauffeured car services primarily to corporate clients, including a majority of Fortune 500 companies in China. Our car services include routine services such as airport pickup and drop-off, inter-office transfers and other business transportation needs, as well as event-driven activities such as conventions, promotional tours and special events. We generally enter into long-term framework agreements with our corporate clients pursuant to which our vehicles and chauffeur services are provided by different subsidiaries under separate contracts. With over 1,000 vehicles and drivers as of June 30, 2014, our car services were offered in 57 major cities across China with a focus on first-tier cities including Beijing, Shanghai, Guangzhou and Shenzhen. In 2013, we derived approximately 33.4% of our net revenues from car services.

        Our total net revenues increased from RMB450.1 million in 2012 to RMB566.4 million (US$91.3 million) in 2013, representing a growth rate of 25.8%. Our total net revenues increased from RMB260.7 million for the six months ended June 30, 2013 to RMB384.5 million (US$62.0 million) for the six months ended June 30, 2014, representing a growth rate of 47.5%. We incurred net losses of RMB175.7 million, RMB152.2 million (US$24.5 million) and RMB20.7 million (US$3.3 million) in 2012, 2013 and the six months ended June 30, 2014, respectively. Our non-GAAP adjusted EBITDA, defined as net income or loss before depreciation and amortization, share-based compensation, interest

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expenses, interest income and provision for income taxes, was RMB68.9 million, RMB102.1 million (US$16.5 million) and RMB133.0 million (US$21.4 million) in 2012 and 2013 and the six months ended June 30, 2014, respectively. For a reconciliation of our non-GAAP adjusted EBITDA to net loss, the nearest U.S. GAAP measure, see "—Summary Consolidated Financial and Operating Data—Non-GAAP financial measure."

Factors affecting our results of operations

        We believe that the most significant macro-level factors affecting our results of operations include:

    health of the global economy and the growth and development of China's economy;

    overall growth of China's car services industry;

    automobile ownership penetration rate and the number of driver license holders in China;

    increasing demand for leisure travel and shift in lifestyle in China towards driving as a preferred means of travel;

    growth of transportation infrastructure in China; and

    governmental regulations and measures relating to vehicle purchase, ownership and usage and tax policies.

        See "Industry" for more information relating to macro-level factors affecting our results of operations.

        Our results of operations in any given period are more directly affected by company specific factors, including:

    Fleet utilization.  Our ability to effectively utilize our fleet will have a material effect on our results of operations. We view our entire vehicle fleet as one pool of assets that are cross-utilizable, and we re-deploy our fleet to complement different demand cycles. Factors affecting the utilization of our fleet include, among others, our fleet size, the demand for our services, our pricing, our customer experience, the effective management of our operations through our proprietary technology platform, and the competitive landscape of car services market in China. In 2012, 2013 and the six months ended June 30, 2013 and 2014, the fleet utilization rate of our car rental fleet was 72.0%, 70.5%, 68.4% and 70.9%, respectively.

    Fleet size and geographic coverage.  Expansion of our fleet size and geographic coverage is essential to the growth of our business. We had grown our fleet from 7,717 vehicles as of January 1, 2012 to 15,409 vehicles as of June 30, 2014, and expanded our geographic coverage from 48 cities as of January 1, 2012 to 90 cities as of June 30, 2014. We intend to continue to expand our fleet size, further penetrate our existing markets, and extend our services to selected new cities which have strong growth potential and are close to our existing markets, transportation hubs or tourist spots. Our business and results of operations will depend significantly on our ability to expand fleet size and geographic coverage in a timely manner.

    Pricing.  We have adopted a dynamic pricing mechanism to determine our rental rates for car rentals. This mechanism determines a specific vehicle model's rental rate based on its purchase price taking into consideration other variables such as pickup/drop-off time and location, the availability of our vehicles during such period at the location, prevailing market prices, demand for such vehicle model and the length of rental period. Operating expenses such as store expenses and other executory costs are not significant considerations in determining our car rental rates. Our management reviews our rental rates for car rentals on a regular basis.

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      We determine the rates for our car services based on a number of factors, including vehicle model, service type, the length of rental period, time and location of pickup and drop-off, and prevailing market prices. Operating expenses such as store expenses and other executory costs are not significant considerations in determining rates for car services. Our management reviews these rates on a regular basis. Our long-term framework agreements with our corporate clients provide for predetermined price ranges and, as a result, our rates for car services are generally more stable.

    Finance costs.  We use banks and third-party financing companies to finance the procurement of a portion of our fleet. Due to our large fleet size and procurement needs, our ability to obtain proper source of financing and respective finance costs in connection with our vehicle acquisition could have a material impact on our results of operations.

    Vehicle acquisition and disposition and our ability to control operating expenses. Vehicle purchases have historically accounted for, and are expected to continue to account for, most of our capital expenditures. To provide our customers with vehicles in good conditions, we typically hold vehicles in our fleet for three to four years before disposing them through a variety of disposition channels, including auctions, brokered sales, dealers and online used car marketplace. The difference between the disposal price of a used vehicle and the residual book value of such vehicle is recorded as a gain or loss under our depreciation expenses in our consolidated statements of comprehensive loss. Therefore, our ability to dispose of retired vehicles at optimal prices will have a material effect on our results of operations.

      In addition, our results of operations will be impacted by our ability to control other operating expenses, including without limitation vehicle-related depreciation, payroll-related expenses, vehicle insurance expenses, vehicle repair and maintenance expenses fuel expenses and store expenses. Our large fleet size provides us economies of scale, enabling us to obtain favorable prices and discounts from key players in the vehicle supply ecosystem. We also plan to open additional in-house vehicle repair and maintenance centers in cities where our fleet has achieved economies of scale and additional in-house repair and maintenance centers are expected to be more cost-effective compared to third-party service providers.

    Ability to attract and retain customers.  The success of our business hinges on our customer satisfaction level, which in turn depends on a variety of factors. These factors include, among others, our ability to (i) consistently provide high-quality customer experience, (ii) continue to offer comprehensive and complementary services tailored to our customers' needs, (iii) maintain good vehicle condition, and (iv) provide timely and satisfactory after-sales services.

    Seasonality.  We generally experience some effects of seasonality due to increases in leisure travel activities and decreases in business travel activities during the summer season and public holidays in the PRC such as Chinese New Year, Labor Day, and National Day. The seasonal impacts on our car rentals and car services may, to some extent, offset each other. In addition, we typically launch promotions for certain car rentals and car services in selected cities after major holidays in China. Our revenues may also fluctuate due to adverse weather conditions, such as snow or rain storms. Seasonal changes in our revenues do not alter our depreciation and labor costs or certain other expenses, such as rent and insurance, which are fixed in the short run.

Key operating metrics

        We utilize a set of key operating metrics which our senior management reviews frequently. The review of these metrics facilitates timely evaluation of the performance of our business and effective communication of results and key decisions, allowing our business to react promptly to changing customer demands and market conditions. When evaluating business performance and profitability, the

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assessment is made on our entire business as opposed to separate revenue streams. Spending, budgeting and resource allocation decisions are also made taking into account our entire business.

        The following tables set forth our key operating metrics as of the dates and for the periods indicated:

Period-end fleet size(1)

 
  As of
December 31,
  As of
June 30,
 
 
  2012   2013   2013   2014  

Car rentals

    8,957     10,500     9,610     14,260  

Car services

    872     1,086     969     1,149  
                   

Total

    9,829     11,586     10,579     15,409  
                   
                   

(1)
"Period-end fleet size" refers to the aggregate number of vehicles in our car rentals and car services fleets as of the last day of a given period to which we hold legal title, including vehicles that we have written off in accordance with our accounting policy and vehicles that are currently missing but have not been written off. As of June 30, 2014, we had written off a total of 127 vehicles since our inception.

Car rentals and car services

 
  For the Year Ended
December 31,
  For the
Six Months Ended
June 30,
 
 
  2012   2013   2013   2014  

Average available fleet size(1)

    8,484     9,937     9,541     13,289  

RevPAC (RMB)(2)

    145     156     151     160  

Car rentals

 
  For the Year Ended
December 31,
  For the
Six Months Ended
June 30,
 
 
  2012   2013   2013   2014  

Average available fleet size(1)

    7,704     8,987     8,686     12,212  

RevPAC (RMB)(2)

    104     115     111     121  

Fleet utilization rate (%)(3)

    72.0     70.5     68.4     70.9  

Average daily rental rate (RMB)(4)

    145     163     163     171  

Car services

 
  For the Year Ended
December 31,
  For the
Six Months Ended
June 30,
 
 
  2012   2013   2013   2014  

Average available fleet size(1)

    780     950     855     1,077  

RevPAC (RMB)(2)

    549     546     553     600  

(1)
"Average available fleet size" is calculated by dividing the aggregate number of days in which our fleet was in operation during a given period by the total number of days during the same period. In determining the size of our fleet in operation, we include all vehicles in our car rentals and car services fleets except for vehicles that have been written off in

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    accordance with our accounting policy and vehicles that have not been consistently made available for rent and that we may consider to dispose when appropriate opportunities arise.

(2)
"RevPAC" refers to average daily net revenue per available car, which is calculated by dividing the net revenues during a given period by the aggregate number of days in which our fleet was in operation during the same period.

(3)
"Fleet utilization rate" refers to the aggregate transaction days for our car rental fleet during a given period divided by the aggregate days our car rental fleet are in operation during the same period. "Transaction days" refer to the aggregate number of days on which a vehicle in our car rental or car services fleet was on rent during a given period.

(4)
"Average daily rental rate" refers to RevPAC during a given period divided by the fleet utilization rate during the same period.

        There is no industry norm with respect to the calculations of these operating metrics. As a result, our operating metrics may not be comparable to those used by other industry participants.

Certain income statement line items

Net revenues

        Our net revenues represent our gross revenues from operations, less business tax, VAT and other related surcharges. The following table sets forth our net revenues for the periods presented by service type. No single individual customer or corporate client accounted for more than 5% of our net revenues in any period presented.

 
  For the Year Ended December 31,   For the Six Months Ended June 30,  
 
  2012   2013   2013   2014  
 
  RMB   % of Net
Revenues
  RMB   US$   % of Net
Revenues
  RMB   % of Net
Revenues
  RMB   US$   % of Net
Revenues
 
 
  (in thousands, except percentages)
 

Car rentals

    293,691     65.3 %   377,013     60,773     66.6 %   175,104     67.2 %   267,552     43,128     69.6 %

Car services

    156,394     34.7     189,381     30,528     33.4     85,552     32.8     116,986     18,858     30.4  
                                           

Total net revenues

    450,085     100.0 %   566,394     91,301     100.0 %   260,656     100.0 %   384,538     61,986     100.0 %