H Capital leads $300m round for China car trading platform
Chehaoduo, operator of China auto trading platforms Guazi and Maodou, which specialize in used and new cars, respectively, has raised $300 million in funding led by H Capital at a valuation of more than $10 billion.
Sequoia Capital China, IDG Capital, and Chehaoduo founder Mark Yang’s own fund have participated in the round, according to a statement. Hike Capital, a fund co-founded by Mark Yang and Anna Xu, has previously supported Chehaoduo’s funding.
Chehaoduo raised $200 million in a Series D extension from SoftBank Vision Fund and Sequoia last year. This followed a $1.5 billion commitment from Vision Fund in 2019. The company claims to have achieved overall profitability in the fourth quarter of 2019.
Guazi connects individual car sellers and buyers, offering a degree of pricing transparency in a highly fragmented industry still dominated by offline dealers. It claims to have developed a big data system that enables standardized pricing for non-standard products. There is also a nationwide collection and delivery network that relies on supply-demand matching.
To build credibility and increase buyer confidence, Guazi only lists vehicles that have been certified by in-house technicians and it has introduced a seven-day return guarantee. After-sales services are also available, including vehicle financing and auto insurance.
“Chehaoduo has leveraged technology to bring new capabilities in the automotive consumer industry. We have witnessed the industry changes brought about by this and the greater user acceptance of the model. Online car purchases reconstruct the value chain - the process is challenging but it offers huge opportunities," said Yue Ji, a partner at Sequoia.
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. Chehaoduo - which means "many cars" in Chinese - was formed in 2017 as part of a rebranding of Guazi and Maodou. The two businesses are operationally independent, although after-sales services are now provided across both brands via a separate unit.
Sequoia, GX Capital, and Welight Capital were among Guazi's earliest backers, participating in a $250 million Series A in 2015. A two-tranche $600 million Series B closed in 2017 and then a $980 million Series C - also comprising two tranches - came a year later. The Series C valued the company at $6.6 billion.
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