Text | Wang Xin
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After a year of precipitation, Uxin, which has continued to lose money, ushered in a rebound.
On June 15, Uxin (UXIN.US) announced that it has signed a financing agreement with Weilai Capital and Joy Capital for a total of 315 million US dollars.
According to the announcement issued by Uxin, Uxin Investment Institution 58 Group, TPG, Huaping Huaping convertible bond holders intend to convert a total of US$69 million in convertible bonds held by them into ordinary Class A shares of the company. In addition, a total of more than ten important investors, including new investors and convertible bond holders, intend to lock up their shares for 9 months.
However, the completion of these transactions has yet to be fulfilled in part of the delivery conditions.
“Uxin has been transforming in the past two years, from a B2C lead intermediary platform to an online mall. It used to only provide sales leads, but now it controls the source of vehicles in their own hands, controls the source of vehicles, and improves the quality. This is what they can integrate. One of the factors to money. In addition, before starting his business, Dai Kun was the general manager of Yiche’s second-hand car. He has a good relationship with Li Bin, and Li Bin is also more supportive of him, so the investment of Weilai Capital is understandable. “An expert in the field of second-hand cars from the China Automobile Dealers Association told AI Finance and Economics.
This is the largest financing Uxin has obtained in 3 years. In this regard, Dai Kun, the founder, chairman and CEO of Uxin Group, said that after the injection of new financing, Uxin will increase quality and service upgrades to create value for customers.
Stimulated by this news, Uxin’s share price rose linearly before the market, with a rise of up to about 25%, but then quickly fell back. Obviously, the capital market has not given a clear positive response to this big benefit of financing.
In fact, it’s not just Uxin. Just a few days before Uxin announced the financing news, on June 10, Guazi used car parent company Chehaoduo Group announced the completion of a new round of financing totaling 300 million US dollars, led by H Capital, Sequoia China, IDG, Yang Hao Yong Personal Fund followed suit.
The second-hand car trading platform that has been silent for a long time has successively obtained financing, but the second-hand car market it relies on is still at a freezing point. More importantly, in non-standard second-hand car transactions, second-hand car dealers are scattered but effective, and the market pricing power is still in the hands of 40,000 second-hand car dealers. In contrast, after years of exploration, the advantage of the platform model has always been Stay at the stage of “talking on paper”.
Uxin “broken arm”, want to be the “Taobao” of used car trading?
In April of this year, Uxin released the third quarter financial report for the 2021 fiscal year. The financial report shows that as of December 31, 2020, Uxin Group’s 2C transaction volume was 2,307 vehicles, and the total revenue was 323 million yuan, an increase of 322.6% from the previous quarter. In addition, the company’s consumer net recommendation score (NPS value) increased from 30 points in the second quarter to 42 points, which also shows that Uxin used cars have improved in terms of revenue and word of mouth. “As the first Chinese second-hand car e-commerce company to list in the United States, Uxin was the first to be optimistic. However, the capital market will not tolerate the Chinese concept stocks not making money for a long time. See it.” An analyst told AI Finance and Economics. AI Finance News learned that Uxin was founded in 2011 by Dai Kun, the former vice president of Bitauto Group. Since its establishment, Uxin Group has attracted American Warburg Pincus, Baidu, Tencent, Hillhouse, Tiger, KKR, Junlian Investment by investors and international investment institutions. However, in the ten years since Uxin was founded, the market environment it faced has become more and more complicated. Beginning in 2012, used car e-commerce companies have gradually been favored and sought after by capital. There have been four used car e-commerce companies with multiple business models of B2B, C2B, B2C and C2C. “Continued” has also become an annual hot word in used car e-commerce. Uxin’s initial main business consisted of two highly synergistic parts: Uxin used cars and Uxinpai. Uxin used car is a B2C business that sells used cars to individual consumers, while Uxinpai is a B2B business that provides services to car dealers. At that time, in order to stand out from the fierce competition of used car e-commerce platforms, Uxin invested more than 5 billion yuan in advertising expenses between 2016 and 2019. In order to seize the C position, Uxin invested 180 million yuan in the exclusive title of the well-known variety show “Running Brothers 3”, and used 30 million yuan in advertising fees to photograph the golden 60-second advertising space of “The Voice of China” “Champions Night”, refreshing The price record of a single advertisement on Chinese TV. Under viral marketing, Uxin has become a well-known used car platform. However, behind the high volume, Uxin has never been able to build itself into a profitable company, and was even exposed to “fake car source data” and “fake financing information.” In June 2018, Uxin, which had narrowed financing channels, chose to go to the capital market to raise funds and went public. Uxin’s prospectus shows that Uxin has been in huge losses before its listing, including a loss of 1.39 billion yuan in 2016 and a net loss of more than 2.7 billion yuan in 2017. In 2019, Uxin’s annual continuous operating business loss was 1.292 billion yuan, a significant reduction of nearly 50% from 2.488 billion yuan in the same period in 2018. In order to achieve profitability and positive cash flow, Uxin’s operating model has been changed and changed. There are attempts from B2B, B2B to C2C. However, this also failed to bring stable cash flow to Uxin used cars. On the contrary, huge debts and tight cash flow made Uxin attempt to sell back its core business through divestiture. Starting in 2019, Uxin began to increase its cash flow by selling business lines. In July 2019, Uxin sold Golden Pacer, a used car finance business line, to an auto finance-related company controlled by 58 Group for US$100 million in cash; in January 2020, Uxin divested its accident car auction for RMB 330 million The business “Fengshun Lubao” was sold to Boche.com; in March of the same year, Uxin sold its B2B used car auction business to 58.com again for US$105 million in cash. “In the past two years, Uxin sold its financial and Uxin auction business, and basically sold its core assets. Coupled with layoffs and store closures, I am afraid there is only one empty shell left.” In April this year, one person. Investors commented. In fact, since the second half of 2019, used car e-commerce companies have entered a reshuffle period. There are challenges such as declining passenger flow, declining sales, reduced car sources, and increased financial pressure. Some leading second-hand car e-commerce companies have even been rumored to close down. Entering 2020, China’s second-hand car transactions are all down. The performance on the industry side is that the entire used car market is in a downturn. In terms of total volume, China’s second-hand car transaction volume in 2020 was 14.341,400, a decrease of 581,400 from 2019, a year-on-year decline of 3.9%. In terms of platforms, the market value of Uxin’s second-hand cars fell by nearly 90% after the acquisition, with serious losses. The scale of Guazi’s carefully selected stores for second-hand cars has shrunk, and the business positions of some stores have begun to shift from shopping malls to lower-cost parking lots. Under this circumstance, people and vehicles in the industry are already in debt and have to file for bankruptcy. Uxin adjusted its own business model, and after breaking off its core assets, it attempted to build its own inventory to survive. Some people say that after the transformation, Guazi has become “Taobao”, and Uxin conducts offline transactions through self-built inventory, which is like “JD self-operated”, betting on the To C national purchasing business. Dai Kun said that Uxin is on a “correct” but “unhappy” path. Even internationally, this road will not be too fast. Carmax, the world’s leading second-hand car brand, has gone for 20 years, and Carvana has gone for 9 years. From another perspective, China’s second-hand car transaction and car source distribution have strong geographical attributes and characteristics. The price difference of second-hand cars formed by cross-regional circulation is now significantly weakening. In fact, the geographical characteristics of second-hand car transactions are more obvious. “A second-hand car dealer needs to establish a standardized distribution system for networked operations. In terms of operational logic, second-hand cars are non-standard products and have a long service chain. CarMax of the United States has established a standardized distribution system through cooperation with auction companies. System. Although some people copy in China, there is no good integration point. As a market pioneer, Uxin hopes that they can truly pass the model.” A second-hand car industry person told AI Finance and Economics. Do second-hand car transactions need an e-commerce platform? In April this year, Uxin opened the country’s first second-hand car superstore in Xi’an. The store is linked with Uxin’s online mall to carry functions such as warehousing, inspection, maintenance, and store display. The hypermarket covers an area of 24,000 square meters and can accommodate 1,000 vehicles, providing one-stop car purchase services for local consumers. “It turned out that Uxin acted as a B2C lead intermediary. After all, the vehicle is in the hands of others, and there is no way to provide consumers with promises and guarantees. The business is doing well, which is reflected in the various aspects of brand guarantee, acquisition control, testing and after-sales service.” Huang Peiwen, CMO of Xinche Zhilian, told AI Finance and Economics. In this way, the size of Uxin is equivalent to more than a dozen large cars. Quotient. “Now it’s common for large car dealers across the country to earn several hundred million yuan a year. The average price of a car is 200,000 yuan, and the gross profit is about 6%. Coupled with finance, a car can earn more than 10%. With a turnover of 15-30 days and inventory of 500 cars, you can earn more than 10 million yuan a month. In addition to offline inventory, Uxin also has car sources in online shopping malls. Generally speaking, it is at least profitable. “Huang Peiwen said. Of course, some people in the industry believe that this estimation method is too idealistic. “The industry is concerned about the transparency of used car information. Although adjustments and changes have been made under the attention and efforts of all parties, the structure of second-hand car transactions that are mainly dealers and the platform as a service organization has not changed. On the one hand, I haven’t seen a breakthrough change. In addition, I think the conditions are not mature enough to support a large car dealer to do the nation’s second-hand car distribution business.” The above-mentioned industry sources told AI Finance and Economics. For consumers, auto e-commerce still has not been able to resolve industry pain points such as information asymmetry, opaque vehicle conditions, complex transaction processes, and uneven after-sales guarantees in traditional transactions. On many complaint platforms, Uxin has been complained by consumers many times because of the many kinds of “financial loans”, “the loan cannot be transferred after the loan is repaid”, and the vehicle information has been modified. “All second-hand car platforms have not solved the pain points of the industry. Uxin advertises that it saves car prices and enjoys the reserve price, but the reserve price has been no standard for many years.” The above-mentioned investor said. Due to the scattered and fragmented nature of second-hand car sources, the domestic second-hand car market prices are usually in the hands of 40,000 second-hand car dealers. Guazi tried to grab the pricing power, but it was not recognized by the market. If you want to use the big car dealers to call the wind and rain, and combine their own advantages to expand the scale, you need to avoid and control the phenomenon of personnel, vehicle sources, and information running and dripping. However, the capital and management problems behind this are also very complicated. Second-hand car platforms have repeatedly failed, mainly because consumers have not formed brand recognition for second-hand car consumption. Moreover, the cost of bringing new used cars is too high. As a commodity with heavy assets and offline, the replacement cycle of automobiles is at least 3-5 years. As far as the platform is concerned, it is necessary to continuously smash advertisements to attract customers. The cost of bringing new customers to each customer is terribly high. This is enough to prove that the flow of vertical low-frequency used car platforms is an eternal pain. The above-mentioned investors even judged that no platform in the used car industry is an opponent of used car dealers. “The industry experience accumulated over the years is the moat of car dealers. The platform cannot be learned even if you spend money. The so-called hundreds of professional inspection procedures can be standardized, but in fact it is just a process. Even if the used car platform is full The annihilation of the army will not affect transactions in the second-hand car market.” This article was originally produced by AI Finance and Economics, an account of “Finance World” Weekly. Please do not reprint it on any channel or platform without permission. Offenders must be investigated.
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