SoftBank Vision Fund invests $1.5b in China’s Chehaoduo

The capital will mainly go towards expanding market share as the company intensifies its arms race with the likes of Souche, Renrenche and Uxin Group, all of which have received substantial PE and VC funding. 

“The investment we have received from SoftBank not only gives us sufficient funding support but also the opportunity to partner with SoftBank in areas such as the use of artificial intelligence and big data in our services,” said Haoyong Yang, the CEO of the company.

Despite the surge in the number of used cars in China, the penetration of online services in this segment remains low, said Xun Chen, a partner at SoftBank Vision Fund. Guazi has become the leading player in its field thanks to good use of data, he added.

Guazi was set up in 2014 by online marketplace Ganji.com, which merged with its competitor 58.com the following year. A few months later, 58.com decided to spin off Guazi into an independent entity. The platform connects individual sellers and buyers of used cars as well as providing after-sales services such as vehicle financing and insurance. It only lists vehicles that have been certified by in-house technicians.

Chehaoduo, which means "many cars" in Chinese, was formed in 2017 as part of a rebranding of Guazi and new car retail platform Maodou. The two businesses operate independently. 

Guazi’s services cover over 200 cities in China, with more than 6,000 employees supporting its offline operations. It claimed to have opened outlets in 100 cities by the end of 2018. Meanwhile, Maodou is planning to open 300 stores in 200 cities.

Guazi raised a $250 million Series A round in 2015, with Sequoia Capital China, GX Capital, and Welight Capital among the backers. A $600 million Series B followed in 2017 across two tranches: an initial round of $400 million in June and a further $180 million round in November. In 2018, Chenhaoduo raised a Series C round, also across two tranches. The first, worth $818 million, was led by Tencent Holdings and the second came to $162 million. The valuation was $6.6 billion.

Alibaba Group has thrown its support behind Souche, which acquired Cheyipai last April to create a platform that covers new and used vehicles. Primavera Capital Group and Morningside Venture Capital led the company's most recent fundraising round in September 2018, which closed at $576 million. Alibaba was among the participants, having taken the lead on the previous round.

Meanwhile, Renrenche closed a $300 million round in April of last year, while Uxin listed in the US. Group has listed in the US. Other car-trading platforms that have received PE and VC funding include Tiantian Paiche, Huasheng Haoche, Mychebao, and Chezhibao.

Chinese online auto platforms have drawn strong interests from PE and strategic players, with well-funded companies including Renrenche, Chezhibao, Uxin, and Tiantian Paiche. The B2B model has been the most popular, but larger players have sought to expand their coverage into C2B, B2C and C2C.

Despite heated investor interest, some companies are said to have run into trouble recently. Renrenche, for example, has started employee layoffs in Beijing and Chengdu. It said these moves were part of internal adjustments, adding that it would cease operations in some lower-tier cities this year to focus on top-tier locations, according to 36Kr.

 

 

 

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

• Topics
• Greater China
• Expansion
• Technology
• TMT
• China
• automobiles
• Growth capital
• Softbank