(Yicai Global) March 2 -- Alibaba Holding Ltd. has joined fellow internet heavyweight Tencent Holdings Ltd. as an investor in two of China's biggest car retail websites following a new funding round.
Beijing-based Chehaoduo Group, the operator of used car website Guazi.Com Inc. and new car platform Maodou.com Inc., completed a C-round of financing worth USD818 million led by long-term backer Tencent, while Alibaba came on board as a new investor through founder Jack Ma's YF Capital arm.
Other participants in the funding round include Sequoia Capital, IDG Capital and Industrial and Commercial Bank of China, with proceeds to be used for expansion of offline retail and the market development of Guazi.com, as well as a revamp for Maodou.com, said Chehaoduo CEO Yang Haoyong.
Major Chinese companies are increasingly looking for opportunities in the car retail sector, especially for used-car sales. Despite total trading volume for second-hand vehicles reaching 12 million cars last year, China Automobile Dealers Association data shows, players in the sector are struggling to make profits.
After intense competition in recent years, the industry may be ready for a change in business model, Wang Weiwei, founder online used-car seller TTPai Technology Ltd. told Yicai Global previously. A consumer-to-business auction model may be the way forward, he added. Tech firms with significant resources such as Tencent and Alibaba may be in a strong position to push transformation in the sector.
A better approach for the industry could combine online and offline sales, one insider said, as solidly internet-based operations may find it difficult to meet long-term development goals.
Guazi and Maodou operate independently from one another within the group. Guazi specializes in used car trading, evaluation and inspection, pricing, auto finance, insurance and warranty services. Founded late last year, Maodou is a car rental and retail platform for new cars. It has partnerships with more than 20 auto brands and operates in 33 major cities in the country.