China Growth Capital leads round for Cheduoduo
China Growth Capital has led a $17.7 million Series A round of funding for Cheduoduo, a newly launched Chinese used car trading platform, with participation from Source Code Capital.
Additional commitments came from Yixin Group, a domestic auto financing business that spun out from Bitauto and listed in Hong Kong last year, and Xingxing Li, who formerly held numerous senior positions with carmaker Geely. Li will also serve and chairman and president of Cheduoduo.
The company’s founders are also automotive sector veterans. Wei Zheng was previously CEO of Shuaiche, an online car retail and related services platform established by SAIC Motor, led online-to-offline (O2O) used car trading business Kanche, and was a senior vice president at Yixin. Bo Cai helped set up Shuaiche’s used car information service and held senior positions at Kanche and Yixin.
They want to replicate the model pioneered by US-based Carmax and create an auto retail hypermarket that offers a range of ancillary services – primarily vehicle financing, but also insurance, testing and evaluation, extended warranties, and vehicle management – in addition to car trading. The platform will be supported by big data and artificial intelligence technology to make transactions easy and secure.
Cheduoduo at present covers nearly 100 cities and claims to have reached more than one million customers. The company will use the new funding to build out its offline network, increase online promotional activities, and optimize user experience. The founders told a press conference that their initial focus is on developing direct capabilities nationwide based on financial services. Once this has been achieved, they will broaden the service portfolio through strategic partnerships.
By using vehicle financing as a starting point, Cheduoduo hopes to differentiate itself in a highly competitive market populated by a host of companies that have received PE and VC funding. Last week, used car trading platforms Chezhibao and Tiantian Paiche raised a combined $225 million, but a lot of capital has gravitated to the likes of Souche, Guazi, Renrenche, and Uxin. The latter recently filed for a US IPO.
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