Bitauto teams up with Tencent, JD.com to drive online car sales in China
Bitauto wants to sell 3 million new and used vehicles via its e-commerce network by 2019, as more Chinese consumers turn to buying cars online
Refuelling with a partnership involving Tencent and JD.com, car website operator Bitauto is looking to accelerate its sales.
The US-listed mainland company, which tested a new e-commerce model last April with consumer-to-business platform huimaiche.com, followed by business-to-consumer website yichemall.com in July, believes the partnership with the internet giants will give it the horsepower it needs to dominate the market as more and more Chinese turn to buying cars online.
“Last year, more than 100,000 vehicles were sold through the two platforms,” said Andy Zhang Xuan, chief financial officer of the company. “We expect the number to triple this year.”
But while the company, which also offers marketing solutions for car companies with its web-based Easypass platform, every day gets 200,000 potential buyers expressing interest to buy, it has been losing many of them as Bitauto has been more of an information provider unable to match all of the buyers’ needs, he said.
All that is going to change.Earlier this month Bitauto announced that JD.com, the mainland’s No2 e-commerce firm after Alibaba, and internet service provider Tencent would invest a total of US$1.3 billion in the company. The two companies have also agreed to invest US$250 million in YiXin Capital, a Bitauto unit that will become its car financing arm upon the completion of the deal in the first half of this year. Bitauto will hold a 50.1 per cent stake in YiXin, while Tencent will have 26.6 per cent and JD.com 17.7 per cent.
The deal will offer Bitauto five years’ exclusive right to operate JD.com’s auto channel and carry a non-compete clause.
JD.com and rival Alibaba, and Bitauto and its US-listed competitor AutoHome, are the four major players that will dominate the car e-commerce market, Zhang said.
“We believe JD.com will bring the most synergy as we share a similar demographic,” he said, adding that the partnership with JD.com would help it become No1 in the market. About 70 per cent of JD.com’s customers are male, with the ability to splash out on electrical or audio equipment, Zhang said. “This is exactly the group that will buy cars online.”
Bitauto has set an ambitious five-year target to sell three million new and used vehicles via its e-commerce network in 2019, 10 times this year’s target.