Used car market: giants can hardly talk about subversion
The second-hand car trading platform “You Xin Pai†(now renamed “Youxinâ€) today announced the completion of a new round of financing. According to reports, "Youxin" this round of financing totaled 170 million U.S. dollars, the lead investor was Baidu, with a total investment of 100 million U.S. dollars, and other investment institutions such as KKR and Coatue followed suit.
As of 8 am, Youxin officials have confirmed this news and announced that they have completed a new round of financing from Baidu, KKR and Coatue, totaling US$170 million. Huaxing Capital is the exclusive financial advisor.
Baidu is not the first Internet giant to take a look at the used car market. In 2014, Ali cooperated with Guangzhou Automobile and established a Taobao second-hand car trading platform; in January this year, Tencent and Jingdong jointly became the shareholders of the Auto; outside of BAT, Leijun’s Shunwei Capital also recently invested in second-hand car trading. Car C2C trading platform "everybody car."
In addition to these giants, the classified information websites of 58 cities, Goji.com, and People.com also used second-hand car transactions as a key business development, and represented by Youxin, Che Yipai, Kaixin Used Car, Dazao.com and Chewang. The number of second-hand car trading service companies is even greater.
The question is: Can the used car market accommodate so many players at the same time? What changes will the whole market bring after the giants enter the game? What other difficulties and bottlenecks in the used car market need to be broken?
Prospects: Internet + used car with huge potential
Chinese consumers generally do not love buying used cars. However, this situation is currently changing.
The data shows that at present, the comparison between China's new-vehicle sales and used-car sales is about 3:1, the United States is about 1:2 to 1:3, Japan is about 1:1.4, and other mature markets are about 1:0.7. From a digital point of view, this means that used cars have much room for development in China. With the changes in the concept of car purchases, the increasing number of new cars, and the changing needs of consumers, the gap between the volume of used car transactions and the sales of new cars will increase. Keep shrinking.
Statistics from the China Automobile Dealers Association can prove this - in 2014, the total domestic used car trade was 367.565 billion yuan, a year-on-year increase of 26.03%. The total number of used car transactions was 6,052,900, 16.33% year-on-year, three times the new car market. The China Automobile Market Index Institute predicts that by 2020, China's used car market will have a turnover of 40 million vehicles, and the market value will exceed 1 trillion yuan.
The market penetration rate of this large-scale market is very low, and the proportion of online transactions accounts for less than 10% of the total amount. How to use IT and Internet technology to transform this industry and create new opportunities? This is a question that is considered by the Internet giants who are eyeing the traditional industry.
Taking the production process as an example, the fragmentation of used cars is serious, and almost all of them come from car owners scattered throughout the country. However, in the traditional trading chain, there is no platform that can aggregate these fragmented vehicles. The convergence of traffic is precisely the advantage of the Internet.
In the United States, entrepreneurship in the used car field is already popular. The well-known used car O2O platform includes Autotrader (the largest used car trading platform in the United States), Cars.com (the second largest car classification website in the United States), Manheim (used car auction platform), and Beepi ("shared economy" type used car trading platform. ), Aucnet (second-hand car remote auction service platform), CarMax (U.S. largest used car retailer).
Both the United States and Japan have listed companies that specialize in second-hand car auctions, and several of them have a market value of about 5 billion U.S. dollars. Therefore, with reference to the US and Japan markets, the prospects for China's used car market in the next few years are very promising.
The status quo: There are numerous models, but it is difficult to talk about subversion . The Internet giant is unlikely to dominate the industry: the complexity of the used car chain makes its trading process divided into a number of independent links, each with a few Large companies exist, focusing on solving one type of problem.
After a used car is taken from the initial salesman, it first needs to be transferred to the car dealer (C2B), then the car dealer will sell the car to the retailer (B2B), and finally the car buyer will be from the retailer. Buy a car (B2C). Therefore, the second-hand car transaction was born with C2B (production), B2B (circulation), B2C (consumption), and four modes of C2C that eliminate intermediate links.
C2B represents that the company has opened new used cars and safe cars; B2B represents companies that have car easy shots and gifted letters; B2C represents companies that have easy cars; C2C represents companies that have cars and cars that gather cars.
In addition to these four types of IT technology and the Internet associated with a larger model, the second-hand car market has a variety of car companies and channel-led auction platform, consignment platform, purchase and sales platform, etc., 58 cities, the people as a network Trading information platform exists. In addition, there are a large number of third-party evaluation service agencies in the used car market.
There are many circulation links and many companies are involved. In this lengthy value chain, the needs of both the seller and the car buyer are often neglected. For example, at the C2B link, B holds more information than C, so it will try to drive down the selling price of the vehicle. If the seller does not get a fair price, it will give up the sale and objectively cause the entire company to operate inefficiently. . In the B2C link, C's understanding of the vehicle is not as good as B, because the lack of vehicle information tracking mechanism and perfect after-sales support services, the lack of trust caused by shrinking demand is also very common.
Therefore, although the Internet giant is in a tough position, it is difficult to talk about subversion because it is confined to a certain point (Youxin B2B, C2C), and there are many opponents. The impact on the industry in the short term will not be too deep.
Future: What problems need to be solved?
In addition to the difficulties in scale development and the formation of monopolistic advantages in the short term, the Internet + used cars still have a lot of industry problems to face.
First of all, the laws and regulations of the used car industry lag behind and the policies are not perfect, which makes it difficult to improve the management level of the used car market and lack of service functions. In China, the used car is not a commodity, not a property. Only the concept of inventory does not have the notion of market ownership and ownership. In the used car industry, the efficiency is very low because the regulations are not sound.
Secondly, China still has not formed a complete and unified evaluation standard for used cars and a vehicle residual value distribution system. The assessment of the value of used cars is too simple and arbitrary. The actual valuation and theoretical value are very different.
Third, the tax standards for used car transactions are not uniform. According to the survey, local taxation on used car transactions is basically based on local policies, and the tax rate varies greatly. The cost of used cars in some areas has been too high, and the profits of companies operating used cars have been meagre. Some regions have used transactions to evade taxes, and over-the-counter transactions, private transactions, and illegal transactions have disrupted the order of used car transactions.
Fourth, the low integrity of the traditional used-car market and poor after-sales service lead to the inability of market potential to be quickly released and the market to be inefficient. Specifically: transfer of used cars is cumbersome, the price is not ideal, and the car is cashing in slower currencies; information is asymmetric, consumers are severely slaughtered; the trading chain is too long. Unnecessary trading links increase the cost of the transaction; used car after-sales service problems and consumer protection systems are too weak.
In addition, problems such as spurious vehicle conditions, unequal sources of vehicles, and insufficient circulation are also affecting the development of the used car industry.
In summary, the arrival of Internet giants will certainly accelerate the pace of development of the used car market, so that funds, traffic and resources tend to be concentrated to a certain extent. For small companies in the industry chain, this means that the pressure of competition has intensified and the oligarchic situation has begun to form. However, subject to industry characteristics and development bottlenecks, it is too early to talk about subversion.
As of 8 am, Youxin officials have confirmed this news and announced that they have completed a new round of financing from Baidu, KKR and Coatue, totaling US$170 million. Huaxing Capital is the exclusive financial advisor.
Baidu is not the first Internet giant to take a look at the used car market. In 2014, Ali cooperated with Guangzhou Automobile and established a Taobao second-hand car trading platform; in January this year, Tencent and Jingdong jointly became the shareholders of the Auto; outside of BAT, Leijun’s Shunwei Capital also recently invested in second-hand car trading. Car C2C trading platform "everybody car."
In addition to these giants, the classified information websites of 58 cities, Goji.com, and People.com also used second-hand car transactions as a key business development, and represented by Youxin, Che Yipai, Kaixin Used Car, Dazao.com and Chewang. The number of second-hand car trading service companies is even greater.
The question is: Can the used car market accommodate so many players at the same time? What changes will the whole market bring after the giants enter the game? What other difficulties and bottlenecks in the used car market need to be broken?
Prospects: Internet + used car with huge potential
Chinese consumers generally do not love buying used cars. However, this situation is currently changing.
The data shows that at present, the comparison between China's new-vehicle sales and used-car sales is about 3:1, the United States is about 1:2 to 1:3, Japan is about 1:1.4, and other mature markets are about 1:0.7. From a digital point of view, this means that used cars have much room for development in China. With the changes in the concept of car purchases, the increasing number of new cars, and the changing needs of consumers, the gap between the volume of used car transactions and the sales of new cars will increase. Keep shrinking.
Statistics from the China Automobile Dealers Association can prove this - in 2014, the total domestic used car trade was 367.565 billion yuan, a year-on-year increase of 26.03%. The total number of used car transactions was 6,052,900, 16.33% year-on-year, three times the new car market. The China Automobile Market Index Institute predicts that by 2020, China's used car market will have a turnover of 40 million vehicles, and the market value will exceed 1 trillion yuan.
The market penetration rate of this large-scale market is very low, and the proportion of online transactions accounts for less than 10% of the total amount. How to use IT and Internet technology to transform this industry and create new opportunities? This is a question that is considered by the Internet giants who are eyeing the traditional industry.
Taking the production process as an example, the fragmentation of used cars is serious, and almost all of them come from car owners scattered throughout the country. However, in the traditional trading chain, there is no platform that can aggregate these fragmented vehicles. The convergence of traffic is precisely the advantage of the Internet.
In the United States, entrepreneurship in the used car field is already popular. The well-known used car O2O platform includes Autotrader (the largest used car trading platform in the United States), Cars.com (the second largest car classification website in the United States), Manheim (used car auction platform), and Beepi ("shared economy" type used car trading platform. ), Aucnet (second-hand car remote auction service platform), CarMax (U.S. largest used car retailer).
Both the United States and Japan have listed companies that specialize in second-hand car auctions, and several of them have a market value of about 5 billion U.S. dollars. Therefore, with reference to the US and Japan markets, the prospects for China's used car market in the next few years are very promising.
The status quo: There are numerous models, but it is difficult to talk about subversion . The Internet giant is unlikely to dominate the industry: the complexity of the used car chain makes its trading process divided into a number of independent links, each with a few Large companies exist, focusing on solving one type of problem.
After a used car is taken from the initial salesman, it first needs to be transferred to the car dealer (C2B), then the car dealer will sell the car to the retailer (B2B), and finally the car buyer will be from the retailer. Buy a car (B2C). Therefore, the second-hand car transaction was born with C2B (production), B2B (circulation), B2C (consumption), and four modes of C2C that eliminate intermediate links.
C2B represents that the company has opened new used cars and safe cars; B2B represents companies that have car easy shots and gifted letters; B2C represents companies that have easy cars; C2C represents companies that have cars and cars that gather cars.
In addition to these four types of IT technology and the Internet associated with a larger model, the second-hand car market has a variety of car companies and channel-led auction platform, consignment platform, purchase and sales platform, etc., 58 cities, the people as a network Trading information platform exists. In addition, there are a large number of third-party evaluation service agencies in the used car market.
There are many circulation links and many companies are involved. In this lengthy value chain, the needs of both the seller and the car buyer are often neglected. For example, at the C2B link, B holds more information than C, so it will try to drive down the selling price of the vehicle. If the seller does not get a fair price, it will give up the sale and objectively cause the entire company to operate inefficiently. . In the B2C link, C's understanding of the vehicle is not as good as B, because the lack of vehicle information tracking mechanism and perfect after-sales support services, the lack of trust caused by shrinking demand is also very common.
Therefore, although the Internet giant is in a tough position, it is difficult to talk about subversion because it is confined to a certain point (Youxin B2B, C2C), and there are many opponents. The impact on the industry in the short term will not be too deep.
Future: What problems need to be solved?
In addition to the difficulties in scale development and the formation of monopolistic advantages in the short term, the Internet + used cars still have a lot of industry problems to face.
First of all, the laws and regulations of the used car industry lag behind and the policies are not perfect, which makes it difficult to improve the management level of the used car market and lack of service functions. In China, the used car is not a commodity, not a property. Only the concept of inventory does not have the notion of market ownership and ownership. In the used car industry, the efficiency is very low because the regulations are not sound.
Secondly, China still has not formed a complete and unified evaluation standard for used cars and a vehicle residual value distribution system. The assessment of the value of used cars is too simple and arbitrary. The actual valuation and theoretical value are very different.
Third, the tax standards for used car transactions are not uniform. According to the survey, local taxation on used car transactions is basically based on local policies, and the tax rate varies greatly. The cost of used cars in some areas has been too high, and the profits of companies operating used cars have been meagre. Some regions have used transactions to evade taxes, and over-the-counter transactions, private transactions, and illegal transactions have disrupted the order of used car transactions.
Fourth, the low integrity of the traditional used-car market and poor after-sales service lead to the inability of market potential to be quickly released and the market to be inefficient. Specifically: transfer of used cars is cumbersome, the price is not ideal, and the car is cashing in slower currencies; information is asymmetric, consumers are severely slaughtered; the trading chain is too long. Unnecessary trading links increase the cost of the transaction; used car after-sales service problems and consumer protection systems are too weak.
In addition, problems such as spurious vehicle conditions, unequal sources of vehicles, and insufficient circulation are also affecting the development of the used car industry.
In summary, the arrival of Internet giants will certainly accelerate the pace of development of the used car market, so that funds, traffic and resources tend to be concentrated to a certain extent. For small companies in the industry chain, this means that the pressure of competition has intensified and the oligarchic situation has begun to form. However, subject to industry characteristics and development bottlenecks, it is too early to talk about subversion.
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