China car trading platform Chehaoduo raises $200m

The company previously received $1.5 billion from SoftBank Vision Fund in February 2019. The latest funding round comes after new car sales in China plunged 48% year-on-year in March, according to China's Association of Automobile Manufacturers.

Chehaoduo said the new round of investment was a recognition of the company’s risk control capabilities amid COVID-19. Having achieved overall profitability in the fourth quarter of last year, it responded to the outbreak by announcing salary cuts two months ago. Most ordinary employees saw their pay reduced by 30% for February and March and received 13 days of extra leave. For vice presidents and above, the salary cut was 50%.

“COVID-19 will accelerate the industry’s consolidation and enhance the leading companies’ advantages,” Chehaoduo said. It plans to use the new capital to improve its after-sales services and to pursue synergies between the Guazi and Maodou units that will cut costs and improve efficiency.

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. After-sales services are now provided across both brands through a separate unit.

Xun Chen, a managing partner at SoftBank Vision Fund, noted that China's consumer automotive market is enormous and still dominated by traditional operators. The technology platform established by Chehaoduo has a positive effect in terms of promoting online car purchasing and improving industry efficiency.

Guazi raised a $250 million Series A round in 2015 with Sequoia, 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.

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• Topics
• Greater China
• Consumer
• Technology
• Expansion
• China
• e-commerce
• Sequoia Capital
• Softbank
• automobiles