Deal focus: Chezhubang fills its tank

China’s fuel retail market has traditionally offered few openings for new entrants. The industry has long been dominated by China National Petroleum Corporation (CNPC) and Sinopec, the country’s two largest oil companies and controllers of more than half of the 10,000 gas stations nationwide.

However, rising mobile internet penetration and the popularity of commercial car rental platforms is changing these dynamics. Start-ups gaining traction include Chezhubang, the developer of an app through which drivers can locate gas stations or electric vehicle (EV) charging locations with the most competitive prices. It also allows them to pay for fuel.

“There are two crucial things that Chezhubang has done correctly that some of its peers have not. First, it chose to focus on commercial car users, who are more price sensitive and drive more, which means they need to refuel more frequently than private car owners. Second, it mainly works with gas station operators that are not part of the CNPC and Sinopec networks. These operators are usually more inclined to offer big discounts on fuel as a means of attracting customers,” says Qi Zhou, a managing partner at GSR United Capital.

GSR United has led Series B round of RMB275 million ($40 million) in Chezhubang, alongside Zero2IPO Investment. The company has now raised more than RMB440 million across three rounds since 2016. Other backers include Asia Capital Link Equity, JoincapHoldings Group, Lanyan Capital, Pusu Capital and Tamarace Capital. GSR United owns around 10% of the business following the latest round.

Chezhubang has expanded rapidly over the past two years. It claims to have signed contracts with over 10,000 gas stations and 270,000 EV charging locations in more than 100 cities, serving 300 million users. 

At first, the company had to pay deposits to gas stations to secure exclusive discounts on fuel. This practice is now being phased out because gas station owners have seen the increase in business as a result of the app and they are happy to collaborate with Chezhubang. These alliances are intended to serve as a gateway to establishing relationships with CNPC and Sinopec.

Revenue is generated by charging commissions on each fuel purchase made via the app. The company plans to widen its monetization channels to include financial services, advertising, car maintenance, and software-as-a-service (SaaS). The objective is to become the go-to app for car refueling. “The company will even develop tools for users to comment on the quality and service of gas stations – just like Meituan-Dianping,” says Zhou.

Chezhubang’s immediate priority is to achieve scale. It will do this by signing up more gas station and EV charging location partners and expanding customer acquisition efforts. The company already works with the likes of Lalamove and Shenzhou Chuxing, which have embedded the Chezhubang app on their own platforms.   

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• Topics
• Greater China
• Early-stage
• Technology
• China
• TMT
• GSR United Capital
• Venture
• Transportation