Road ahead looks clear for China’s used car sales to accelerate
The trading of used vehicles in China, the world’s largest auto market, is expected to gather momentum as investors on Thursday alone refilled a US$500 million war chest for the country’s second-hand car sales sites to expand their market.
Guazi.com, China’s largest used car trading site by sales volume, announced on Thursday that it has secured a new round of financing worth US$400 million, as it plans to roll out its service to more users across the country.
“We have expanded to more than 200 cities in China, of which many are third-tier and fourth-tier cities. Our target is to have monthly sales of more than 80,000 used cars within the year 2017,” said Yang Haoyong, chief executive officer of Beijing-based Guazi at a press event.
Based on the ratio in the United States, China’s second-hand car market should see 60 million units changing hands each year
The two-year-old start-up, which allows car owners to directly sell their used vehicles to buyers online, sold about 41,000 units in December 2016.
Sequoia Capital China led the latest round of funding, while existing investors including Matrix Partners China and BlueRun Ventures, and new investors like H Capital and New Trend Equity, also pledged capital. It comes nine months after Guazi’s previous financing round, which raised US$250 million.
Also on Thursday, Guazi’s smaller rival Mychebao announced it had landed new funding of 500 million yuan (US$ 73.58 million).
The fundraising of both companies is the latest sign that investors are betting big on the future of the used car market in China, especially after several positive signals from the Chinese authorities.