The used-car industry has long been plagued by bad press, with fierce competition among entrants and frequent backbiting. In the final analysis, similar models, similar difficulties, so that these used car platform not only sympathize with each other, but also have to chase the market. Among them, especially with three well-known quite high platform headed, stir up the whole second-hand car market is not peaceful.
On June 27, Uxin Group was officially listed on NASDAQ as the first stock of used car e-commerce, improving and optimizing the capital flow with the help of listing. Last year, Uxin accounted for more than 40% of China’s used-car e-commerce market, with transactions worth 809.272 billion yuan, iResearch data showed.
Recently, aurora iAPP, a third-party market research agency, released the data of automobile trading industry in May this year, and Guazi used car MAU led the industry, ranking first with 7.0547 million monthly active users. And far exceeded the following renren car 2,605,100, Youxin used car 2,160,400 and Taoche used car 1,881,900 monthly live.
Renrenche, which entered into a partnership with Didi Chuxing in March, also announced on April 26 that it had received a new round of investment of $300 million, led by Goldman Sachs and co-backed by Tencent and Didi.
However, behind a group of beautiful data, it is a lot of financing and people can not distinguish the direction of the road. Have to say, used car market is a tough nut to crack.
In March, the policy of restricting the relocation of second-hand cars was implemented, which gradually solved the long-standing problems hindering the circulation of second-hand cars in China and further released the potential of the second-hand car consumption market. However, it is worth thinking about, these in the used car platform really come spring?
In addition to negative news, many second-hand car platforms in the industry also have some common characteristics. In this immature market, there are several common characteristics that hinder the development of the whole industry.
One is the advertising and marketing war that the competition takes to run off the rails
In the era of mass media, where there is traffic, there will be advertising, and the advertising and marketing competition in the second-hand car industry is particularly fierce, and has even evolved into an abnormal atmosphere of competition. According to data from IResearch, in 2015, the total amount of second-hand car e-commerce advertising exceeded 800 million yuan and reached 1.2 billion yuan in 2016.
In the first quarter of 2018, the company spent 638 million yuan on sales and marketing, 68.06 million yuan on research and development, and 161 million yuan on administration, according to its prospectus. The spokesperson of The company also changed from Wang Baoqiang to Leonardo dicaprio. In 2016 and 2017, uxin invested 794 million yuan and 2.203 billion yuan in sales and marketing respectively, accounting for 96.2% and 112.9% of the total revenue in the same period.
Guazi Used car and Renrenche are also well-known in the market for their investment in brand advertising, which is not as open and transparent as Uxin after its listing. However, we can learn from various channels that guazi used car and Renrenche spend billions on marketing, making guazi and Renrenche household names.
In addition to guazi used cars, Youxin, Renren car is the main force to promote this advertising war, the newcomers are to follow suit. The founder of Daso car has publicly said that it will spend more than twice as much as any other friend to open the car market step by step. It has to be said that this huge investment in the publicity of brand sound is undoubtedly contrary to the idea of urgent exploration and innovative development of China’s second-hand car market.
Second, unusual joint and several liability of spokespersons
At the end of last year, the “last case of rights protection in 2017” occurred in the second-hand car industry. The reason was that a consumer in Guazi second-hand car found that his car had been sold to a dealer at a low price in the process of the sales staff on the platform, and the dealer sold his car at a high price in many places. Therefore Sue guazi used car and its spokesperson Sun Honglei exist false propaganda behavior, and ask for compensation for economic losses of 8000 yuan. As a result, the second-hand car platform and spokespersons have been pushed to the forefront of the storm, causing extensive attention in the industry, and the tip of the iceberg of the second-hand car industry has also emerged.
From Wang Baoqiang and Leonardo as spokespersons for Youxin, Sun Honglei as spokespersons for Guazi second-hand car, to Huang Bo as spokespersons for car, the spokespersons of second-hand car industry show similar characteristics: reliability, quality and integrity. In fact, in other industries, enterprises also have negative influence on spokespersons, but star spokespersons and enterprises are still separated. The author thinks that the reason is that second-hand car platforms invest a lot of energy and money in the selection of spokespersons, and establish a strong connection between spokespersons and enterprises. They try to compare the image of spokespersons with that of enterprises, so that consumers get the illusion that enterprises are reliable and honest.
Therefore, many consumers indirectly trust second-hand car platforms because they believe in the reputation of spokespersons, which ultimately leads to the joint liability of second-hand car spokespersons after the interests of consumers are damaged. From the point of view of consumers, these used car platforms spend a lot of money on brand marketing and endorsements, but ignore the actual needs of users and do too much superficial work. However, in the face of repeated negative news, the image of second-hand car platform is still in jeopardy, and even involves the spokesperson.
Third, everyone is very short of money
On the one hand, advertising marketing, burning competition and so on accelerated the consumption of capital. The model of raising money quickly and burning money quickly does not last. Guazi used cars spent an average of more than 1 billion yuan a year on advertising in the past two years, and its new car business, Maodou New Che.com, has spent nearly 1 billion yuan on advertising since its launch, data show. Coupled with the continuous expansion of the business matrix, even in the offline opening of hypermarkets and other measures, guazi is inevitably beyond its means. Sales and marketing accounted for 112.9 percent of uxin’s total revenue last year, as did Renren.
On the other hand, the uncertain profit model, business direction is not clear to further expand the pressure of capital. The low frequency and low efficiency of used car C2C, coupled with heavy asset allocation, is likely to make Guazi unable to obtain profitability in the short term. Chen Hao, managing director and president of Junlian Capital, said that uxin’s B2B business is profitable, while most of its losses come from B2C, mainly from marketing costs. The main reason is that the current industry has not completed the race circle, and they are still trying to obtain more customers and traffic, so the competition pattern of the industry has not been fully formed. Most used car platforms in the industry face a similar dilemma.
The used-car market, never short of financing capacity, has struggled with profitability. Worse, against this backdrop, confidence in capital has begun to falter, and the used car industry is already on the rocks. Whether melon seeds or renren car has been caught in financing Rashomon, hundreds of millions of financing repeatedly failed, the whole market is turbulent, very restless. In the opinion of experts from the Expert Committee of China Automobile Distribution Association, the strategy of “burning money” in advertising of second-hand car e-commerce is mainly to expand the market, in order to maximize the market share within the limited range of resources, and when it reaches a certain scale, it is expected to achieve profits.
But how far is that day?
Who can do used car platform life-saving straw?
The success of second-hand cars depends on users and the market. In fact, the most typical feature of the domestic second-hand car market is the dispersion of car supply. Therefore, the core logic behind the criticism of direct selling mode and the questioning of the difference earned by no middlemen lies in the low efficiency and high difficulty of the C2C mode. And correspondingly, the auction model is popular. Many point to the mature USed-car market in the US as an example of the popularity of efficient auctions with full bids.
In fact, in mature European and American markets, it is not uncommon for buyers and sellers to personally trade used cars. This is because in the context of a perfect social credit investigation system, C2C transactions without any intermediary platform are actually more convenient, fast, transparent and reliable. Therefore, in the case of incomplete construction of domestic credit investigation system, the direct sale model launched by some second-hand car platforms cannot be fully realized in the short term.
Therefore, it can be seen that second-hand car trading has two major pain points, one is the reachability of the transaction, the other is the real controllability of the transaction. The former needs to solve objective problems such as trans-regional and vehicle pooling, while the latter requires third-party platforms to maintain supervision and ensure the authenticity and credibility of transaction information. Therefore, the role of the platform to display vehicle source information is also crucial, and rich and credible vehicle source information is the basis for facilitating transactions. At the same time, we can not ignore the impact of the environment on the market.
First, the development trend of the used car market is obvious. SUV and MPV have gradually become popular models, while German and Japanese series are still the main products. However, the return on investment of second-hand cars at both ends is not ideal. Second-hand cars priced between 100,000 yuan and 300,000 yuan may be relatively more stable. Low-end car users have a low conversion rate, while ultra-high-end second-hand cars have high risks and low profits. Therefore, focus on high-end and hot – selling models, with scale advantage to make up for the short board will become possible.
Second, due to the pressure to sell new cars, the competition between old and new cars is beginning to cross. Therefore, although the direct selling model has low operability in the short term, the mainstream trading model will still be the main field of B-end service providers, but the traditional profit model of price difference is bound to move to the service profit model, reduce the dependence on price difference, and profit from value-added service will become the profit mainstream of second-hand car platform.
Thirdly, to re-understand the importance of credit information in second-hand car trading is not to try every means to block up credit loopholes, but to effectively dredge and complete the self-restraint of both sides of the transaction through the establishment of the credit system. In fact, the second-hand car market is huge, and the second-hand car platform can even establish its own unique credit database. In this commercial era, the value of credit information is much greater than we imagined.
Generally speaking, the development of second-hand car platform is not mature enough, and it has been pushing in the wrong direction, putting the cart before the horse and causing many pain points. However, the used-car industry will only grow in size as the policy environment for used-car circulation, purchase restrictions and taxes further affect the overall market. However, no matter which model is adopted, credit information is the cornerstone of development that cannot be ignored. In the long run, credit data is the lifeline for used car platforms to survive.
Article/Liu Kuang public account, ID: Liukuang110