Chinese auto parts platform Casstime raises $80m

VC investors have backed several start-ups in this space, with the likes of Haoqipei and Qipeipu operating similar B2B platforms to Casstime. Mancando, which secured a Series A round in February, is the exception to the rule, given its emphasis on brick-and-mortar outlets rather than e-commerce.

Founded in 2015 by Overmars Jiang, formerly an executive at Huawei Technologies, Casstime combines a search engine and a procurement platform. It claims to be the largest online destination for purchasers of spare parts and accessories in China, receiving one million inquiries a month from a network of more than 60,000 workshops. The company has a presence in 300 cities and sources products from 1,200 suppliers.

China is the world's largest auto market, with 250 million vehicles on the roads and sales of 28 million units in 2018, compared to approximately 17 million in the US. Although sales were down on the previous year – the country's first decline in two decades – the market remains underpenetrated relative to more developed peers. Average vehicle age is also seven years lower than in the US. Casstime expects these factors to drive growth in an aftermarket it claims is worth $1 trillion. The company didn't explain how it defines the market. Earlier this year, Haoqipei gave a more modest assessment of $180 billion.

Casstime also seeks to leverage the lack of standardization in the market. New vehicle models with different specifications are released every year, which means no single supplier can fulfill all needs. At the same time, there are no aftermarket data standards for the specification and numbering of spare parts. Workshops must conduct manual research, and many operate through trial and error.

"Due to the long-tail characteristic of auto parts, the rationale [that] high-frequency product providers prevail over the low-frequency product providers does not apply," Jiang said in a statement. "Casstime aggregates the low-frequency transaction of professional customers distributed over different suppliers and cultivates them to become high-frequency behavior through its one-stop procurement platform."

In this respect, Casstime functions like any other online B2B trading platform in China, removing information asymmetries, enabling pricing transparency, and facilitating communication between fragmented buyer and seller communities. Its Google-style search engine helps users identify unique part numbers, responding to standard product names as well as colloquial variants. The matching algorithm recommends suppliers based on a user's past activity, quality needs, and location.

The company has a technical team that advises workshops on product selection, as well as offering software-as-a-service (SaaS) systems – using big data analysis of past transactions to offer guidance on inventory management - supply chain finance, and logistics services. For the latter two functions, it collaborates with third-party providers.

"Casstime grasped the perfect moment in the industry when infrastructure was weak and demand was high. With its SaaS and data-driven model, Casstime determined its strategic path by constructing transaction standards and credit systems for the industry and quickly became the leader in this market," said Kui Zhou, a partner at Sequoia. Yi Cao, founding partner at Source Code, added that "vehicle parts is a classic case where the internet can reduce transaction friction."

The company's initial Series C tranche also featured existing investor Hua Capital, while China TH Capital served as exclusive financial advisor. Casstime has now raised nearly $200 million across six funding rounds, with the likes of Fosun RZ Capital and Shunwei Capital among its other backers.

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• Topics
• Greater China
• Expansion
• Technology
• China
• automobiles
• TMT
• Source Code Capital
• Sequoia Capital