Autohome plans expansion alongside delisting from New York
China’s top car-selling website company is looking to grow in e-commerce, CEO Qin said.
Autohome, China’s leading automobile website operator, plans to expand its presence in e-commerce, CEO Qin Zhi told the South China Morning Post in an interview.
He recently offered to buy out the New York-listed company with funding from three private equity firms.
The company will expand its auto e-commerce business with the ambition of becoming the largest internet-based auto transaction platform in the next three years, Qin said. Online transactions could account for 20 per cent of total auto sales in the next three to five years from just about 1 per cent last year, he said.
“Everything is changing, so we need to restructure our business in order to embrace challenges,” Qin said. This is also one of the reasons behind the buyout offer, he said.
“The privatisation will give us flexibility to do things and aim towards a long-term objective,” Qin said. He spoke to media for the first time after the buyout offer was made.
Qin led a consortium, which includes investment firms Boyu Capital, Sequoia China and Hillhouse Capital, to make a non-binding buyout offer of US$31.50 (HK$244) per Autohome’s American depository receipt last month. The offer values Autohome at US$3.57 billion.
It was seen as a rival bid because it came just hours after Australian phone company Telstra announced on April 15 that it had agreed to sell its 47.7 per cent stake in Autohome to Chinese Insurer Ping An’s trust unit for US$1.6 billion, or US$29.55 per share.
That deal needs regulatory and company approval. Ping An Trust said in a reply to the Post on Friday that the agreement is in progress.
“These are two separate deals, two different things,” Qin said, referring to the buyout offer and the sale of Telstra’s stake. And he said he is not in the right position to comment on the other deal.
Autohome has set up a special committee to consider the privatisation proposal by Qin’s consortium, the company said in a statement on April 26.
Qin said the “going-private” proposal was made because the company needs to consider a long-term plan and transform itself to meet changes in China’s automobile industry rather than focus on short-term profit.
“We need long-term capital to back us up and we also need investment,” he said. The company also needs entrepreneurial management with a long-term vision, Qin said.
The disclosure requirement as a public company will also hinder its long-term planning because it needs to disclose strategic moves to potential investors on a quarterly basis, he said.
Autohome’s revenue last year increased by 62.4 per cent to 3.5 billion yuan (HK$4.2 billion), with the main contribution coming from advertising income which rose by 60.1 per cent to 2.4 billion yuan.
The e-commerce business is promising and the revenue from this segment will become significant this year, Qin said.
During last November’s ‘Singles’ Day’ online shopping festival in China, Autohome said more than 35,000 cars, worth about 5.2 billion yuan, were sold on its platform, an increase of 40 per cent from the previous year.
Car sharing is also the next big trend and Autohome will look for opportunities in car-hailing, auto-piloting and electric vehicles, he Qin said.