Ucar approved for NEEQ listing

Ucar Inc, a car-hailing app launched by Hong Kong-listed China Auto Rental (Car Inc), the country’s leading car rental site, is going to become the first of its kind to be listed on China’s National Equities Exchange and Quotations (NEEQ), over-the-counter stock market.

The NEEQ, dubbed the New Third Board, approved Ucar’s application on Monday, Xinhua reported. Investors will be able to trade its shares through market makers, with a launch date yet to be announced.

“Ucar must be very very cash-strapped after the cutthroat competition with its rival Didi Chuxing and Uber,” said Ray Zhao, an analyst with Guotai Junan Securities.

“They may have run out of money, or at least, listing on the Third Board will make its financial position easier and cheaper, which is vital to survive,” he added.

Car-hailing apps are spending billions of yuan on subsidising drivers to gain market share, but local authorities across China remain unclear on the rules to regulate the fast-growing ride-hailing market, after claims that their subsidy-led business models breach competition rules.

According to Beijing-based consultancy Analysys International, Didi Chuxing, Uber and Ucar rank as mainland China’s top three operators last year, with market shares of 80, 12.5 and 7.8 per cent respectively.

Set up in December 2014, Ucar uses a B2C model under which it uses its own drivers and cars.

Uber and Didi Kuaidi focus on connecting private car owners with passengers, in what is referred to as a customer-to-customer model.

Ucar lost about 555 million yuan in the first quarter of this year, more than 38 per cent down on its loss of 905 million yuan in the fourth quarter of 2015, according to Xinhua.

Ucar claims its daily orders reached over 260,000 in the first quarter of this year, six times than the same period of last year.

In September last year, the company secured US$550 million in a B-round of financing from a group of investors, including Tourmaline Gem, CAR Inc, Harmony and Haode Investment, pushing the company’s cash reserves to between 8 and 9 billion yuan, according to media reports.

In April this year, Ucar and Alibaba (China) Technology Co Ltd agreed to become strategic partners in internet and auto related fields, such as map applications.

The same month Ucar applied to be listed on the New Third Board.

China’s ride-hailing industry is growing faster than industry insiders had predicted, with billions of yuan being poured into the sector, following Apple’s US $1 billion investment into Didi Chuxing, and Saudi Arabia’s Public Investment Fund US$3.5 billion injection into Uber.

The Ministry of Transport published draft rules in October pledging to tighten its regulation of internet-based car-booking firms.

It stipulated that all car-booking companies had to be licensed and set up their servers on the mainland. The rules have yet to come into effect.