Goldman Sachs leads US$300 million investment in China’s second-hand car sales platform Renrenche
Goldman Sachs will lead a US$300 million investment in Chinese used car sales platform Renrenche, injecting fresh capital into a market that has seen private car ownership in the country surpass 210 million.
Didi Chuxing and Tencent – currently the platform’s two top institutional shareholders – will also take part in the latest funding round, according to a statement issued by Renrenche on Thursday.
The investment will allow the company to hire additional people and invest in new technology to raise the entry barrier for the car sales business, the statement said.
Second-hand car sales have picked up in China over the past few years in tandem with the sale of new cars, helped by supportive policies such as the easing of rules on auto loans and as the internet and popularity of e-commerce combined to allow shoppers to compare prices. Last year, 12.4 million used cars were sold in the country, up 19.3 per cent year on year, according to the China Automobile Dealers Association.
The boom has convinced some of the country’s biggest tech giants to invest in the industry. Alibaba Group Holding, parent company of the South China Morning Post, is now the biggest investor in SouChe after leading a US$335 million funding round for the start-up in November. Tencent Holdings has backed both Renrenche and Chehaoduo, with the latter, formerly known as Guazi, closing a US$818 million funding round led by the social media and entertainment giant.
Uxin, backed by global private equity firm TPG, Tiger Global Management and China Vision Capital, is mulling an initial public offering in the US later this year, according to people familiar with the plan.
There has been intense competition among players to grab the attention of consumers. Earlier this year Uxin hired Hollywood star Leonardo DiCaprio as its celebrity spokesman, while Renrenche and Chehaoduo are using domestic movie stars Huang Bo and Sun Honglei respectively.
In November Renrenche took legal action against Chehaoduo for promoting itself with the slogan “taking a safe lead”, citing unfair competition.
Flush with capital, the used car platforms have been diversifying into comprehensive auto service providers, including new car sales.
In an interview last month, Renrenche founder and CEO Li Jian said the company will focus on developing auto financial services this year while exploring the after sales services market with Didi, which plans to purchase a million second-hand and new cars through the Beijing-based company in the coming three years.
Founded in 2014, Renrenche operates in over 80 Chinese cities and also counts Shunwei Capital, backed by Xiaomi CEO Lei Jun, as well as Beijing Prometheus Capital, led by Wang Sicong, son of property billionaire Wang Jianlin, among its investors.