RenRenChe, a leading Chinese C2C used-auto platform has received $200 million in funding from ride-hailing giant, Didi Chuxing.
The investment and getting Didi on as an investor is deemed a victory and a wide open path for large opportunities for RenRenChe. Didi Chuxing is valued at approximately $50 billion and brings with it a huge user base and plenty of opportunities for “synthesis” with the used-auto platform.
RenRenChe, according to reports. will be launching some of its transactional services within the Didi Chuxing app. If that doesn’t allow the usedautomobile platform to tap into Didi Chuxing’s vast data base, then we don’t know what will.
RenRenChe CEO Li Jian said, “Didi’s investment will deliver to us 400 million users and 17 million drivers, for a used-auto platform this is not only the largest user base, but also the most targeted one.”
A previous investment round for RenRenChe’s, a series C round from August 2016, saw internet tech giant Tencent take the investment lead. At the time RenRenChe was valued at $500 million. Then came the startup’s September 2016 series D funding $150 million round, this time around led by Prometheus Capital and China Minsheng.
RenRenChe has hit a sweet spot with what it wants to sell. The used automobile market is booming in China. According to estimates from The China Automobile Deals Association, by 2020, the number of second hand cars traded will equal that of new car sales at 29.2 million units.
At present the leading names in the C2C used automobiles market in China is Guazi.com, Uxin, and RenRenChe. Hitherto none of the trio have been able to differentiate their service from the other, relying heavily on advertising and promotions to generate revenue. With this latest round of funding RenRenChe gets a new lease of life and capital to spend. It’s highly likely the sector will witness some consolidation among the players for high cash burn and low revenue cannot last forever.
Last year, Guazi spent 1 billion RMB ($150 million) and RenRenChe spent 500 million RMB, on celebrity branding, according to reports from China Money Network.
RenRenChe’s valuation is expected to be higher than it was a year ago. The company says this new $200 million will not buy Didi a controlling share.
RenRenChe completes over 200,000 transactions a year in 300 cities across China. According to analytics from third party data, Guazi, backed by 58.com (a large ecommerce company in China), has pulled ahead by slightest margin and may even be pushing back RenRenChe.
In addition, Guazi received $400 million in Series B in July 2017. It was a round led by Sequoia Capital China with new investors such as H Capital, CMB International, Jingxin Venture Capital, Dragoneer Investment Group, and existing investors Matrix Partners China and BlueRun Ventures.