Tencent fuels US$85 million funding round in Renrenche as used-car market speeds up
Chinese online giant Tencent led a US$85 million funding round in online used car marketplace Renrenche.com, the firm said on Monday, amid increasing investment and competition in the second-hand car sector.
Both established e-commerce players and start-ups have been tussling for market share as total second-hand car sales grew by 16 per cent to more than 6 million in 2014.
In November, both classified listings site Ganji.com and e-commerce giant Alibaba expanded to cover used car sales, while established players like Cheyipai, Youxinpai, and Uxin all attracted investments of between US$75 million and US$260 million.
Renrenche specialises in eBay-style customer-to-customer sales, claiming to save customers around 20 per cent on fees that would normally be paid to agencies or car dealers.
In a statement, the Beijing-based firm said the US$85 million raised this week will be used to expand its service across China and introduce new services including car maintenance, insurance, loans, and car rentals.
Renrenche chief executive and former Baidu and Microsoft employee Li Jian said the firm hoped to grow to more than 10,000 deals per month. It currently handles around 1,000 sales every month, at a trade volume of more than 100 million yuan (US$16 million).
China's second-hand car market is growing faster than new sales, with the annual growth rate in the used sector more than double that of new cars, according to the China Automobile Dealers Association.
The amount of second-hand cars sold is still far behind new sales however, at around 0.38 used cars for every new car sold. In the US, the ratio of second-hand to new car sales is 3.85:1, while in Germany is is 2.37:1 and in Japan 1.45:1.
CADA estimates that at current rates of growth, the ratio will reach 1:1 in China by 2020.