Why China’s Craigslist 58.com and others invested millions in used car trader Uxin

China’s Craigslist-esque online classifieds giant 58.com along with other investors injected USD 230 million in funding into the nation’s top used car e-commerce platform, Uxin (Nasdaq:UXIN). The news comes according to the company’s announcement on May 29. Other investors include Warburg Pincus and TPG, both of whom invested in Uxin prior to its IPO. In addition to the recent investment, 58.com pledged to begin strategic cooperations with Uxin and to fully support it in services of passenger flow, vehicle sourcing, vehicle detection, big data, and SaaS.

58.com backs Uxin

Reading into the background of the latest investment, industry insiders believe that, on the one hand, the long-term strategy and value of Uxin look favorable given that Warburg Pincus, TPG, and other shareholders have increased investment. It also indicates that Uxin’s market value is currently underestimated.

On the other hand, 58.com, a former shareholder of Guazi, a competing used car trading platform, recently turned around to form an alliance with Uxin instead. Doing so may usher in the most significant variable to China’s second-hand car e-commerce market. Many analysts believe that, in terms of development prospects, potential value, and business models, Uxin and 58.com can reap considerable gains from effective cooperation.

China’s bustling used car market

It’s no surprise that Uxin has caught the attention of leading investors. In recent years, thanks to the impact of the macroeconomic environment and ever-changing market factors, China’s car market has entered the “stock era”, which means that the used car industry is now faced with myriad development opportunities. According to the market analysis report issued by the China Automobile Circulation Association in 2018, the total number of used cars traded in China increased 11.46% over the same period of the previous year to 138.219 million, all the while maintaining a strong two-digit growth trend. At the same time, China’s used car e-commerce industry has experienced rapid development while used car trade volume and turnover have further increased, with penetration likewise increasing significantly.

Yao Jinbo, CEO of 58.com, said in the announcement that with the continuous technological innovation and resource investment of the majority of used car service providers, consumer experience buying and selling used cars locally and across regions has significantly improved. In the future, China’s domestic used car market has great potential for development, and the volume of used car trading is expected to surpass the sales of new cars.

According to the fourth quarter and 2018 yearly financial reports issued by Uxin Group, the cumulative turnover of Uxin in 2018 exceeded 800,000 vehicles.  Uxin’s total revenue in the 2018 calendar year soared to RMB 3,315.4 million (USD 483.1 million), reflecting a 69.9% growth from last year. 2C transaction revenue likewise surged by 180.3% from a year ago to RMB 645.3 million.

The B2C mode is catching on

Due to the increasing costs of attracting users, 58.com has sought to access new markets in an effort to improve market growth. Compared with other used car e-commerce platforms, Uxin’s platform combines all the expected services yet also improves the efficiency of both car suppliers and users.

In the latest financial report, 58.com said that it would continually seek to engage with enterprises that have the advantage of business synergy opportunities. Now, it seems that the story that Uxin and 58.com can tell is not only of capital, but also of a used car e-commerce eco-alliance. The underlying logic behind their cooperation, after all, is the B2C model, which ultimately helps to empower car suppliers and users.

Within one of the most competitive avenues in China’s tech field, Renren, Guazi,  Dasouche, and other companies have been in a neck-and-neck race to provide used car services. All of the players are moving toward the B2C business model as Uxin has done. The investment of 58.com in Uxin may cast a key vote for the company’s second-hand car e-commerce model.

(Top photo from Uxin)

Lena Zhang

Lena is our columnist. Previously working as a finance reporter, she is passionate about social sciences and curious about how technology impacts our lives. She holds a master's degree in Social Anthropology from London School of Economics and Political Science.

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