KKR joins $170m round for China used car trading platform

The capital will be used to support Uxin's expansion in the B2C space, following the launch of Uxin Used Car, which connects auto retailers to used car buyers.

A lot of investment in Chinese auto-trading platforms has focused on businesses that facilitate transactions between wholesalers and dealerships. However, margins are said to be thin due to limited bargaining power and rebates offered to dealerships in return for their custom, so some of these players have begun to gravitate towards consumer-facing segments.

Founded in 2011 by executives from listed online auto advertising business BitAuto, Uxin is already a dominant B2B force through Youxinpai. It is China's largest used car auction site with a 47.8% market share by transaction volume in the first half of 2014, according to consultancy iResearch. It started as an online-only offering but then introduced a network of physical centers.

The company received two rounds of funding - from Legend Capital, Bertelsmann Asia Investments, DCM and Tencent Collaboration Fund - before Warburg Pincus and Tiger Global Management led a bumper $260 million round in September 2014. At the time, the online offering was complemented by six offline centers providing auctions and other services, and it had worked with about 15,000 car sellers.

Now Uxin claims to employ over 1,000 specialists in 50 Chinese cities who inspect and certify the quality of used vehicles sold via its platforms. The company offers buyers a full guarantee, whereby purchases are refunded within 15 days if vehicles have previously undisclosed issues. More than 150,000 transactions are executed through Uxin's online and offline platforms each year. It also has an auto financing business.

For most Chinese used car platforms, the objective is to use scale and technology to make trading less opaque, removing the inherent distrust that exists between buyer and seller. Chris Dai, CEO of Uxin, said in a statement that the introduction of Uxin Used Car - or xin.com - offers buyers wider choice, more transparency, and greater confidence.

"China's online used car market is set to boom in the coming years, and KKR is very positive about this industry and about Uxin, given the excellent performance of its B2B business. Uxin's expansion into the B2C e-commerce segment comes at an important time for China's used car market," added Julian Wolhardt, China regional leader at KKR.

There were just over six million used car transactions in China last year, up 16.3% year-on-year, with passenger vehicles accounting for 3.5 million of them, according to the China Automobile Dealers Association. Total sales were worth RMB368 billion ($58 billion), a gain of 26% on 2013. New car sales were much higher, coming in at 23.5 million units - the opposite of the situation in the US where 2.5 times more used cars were traded than new vehicles.

Prior to this latest transaction, AVCJ had reported on eight PE and VC investments in Chinese used-car trading platforms in the past 18 months. They include a $110 million Series D round for Cheyipai, Youxinpai's major rival in the B2B space, led by social networking platform Renren, with participation from existing investors Sequoia Capital, Matrix Partners, Morningside Technologies and CITIC Capital.

Earlier this month, Baird Capital, FLAG Squadron Capital and Delta Capital made a much smaller commitment - of around $10 million - to Carsing, a specialist C2B platform, which facilitates sales of vehicles by consumers to wholesalers. The company is said to be China's third-largest online trading platform after Youxinpai and Cheyipai.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Greater China
• Consumer
• Technology
• Expansion
• KKR
• Baidu
• Growth capital
• TMT
• Consumer
• China
• automobiles