The pre-owned car trading website renrenche.com announced Monday that it raised $85 million C round funds lead by Internet giant Tencent Holdings. The investment was made in April, but was announced after the company expanded to 20 cities by July. (Photo provided to chinadaily.com.cn)
The pre-owned car trading website renrenche.com announced Monday that it raised $85 million C round funds lead by Internet giant Tencent Holdings. The investment was made in April, but was announced after the company expanded to 20 cities by July.
Li Jian, the founder and CEO of renrenche.com, said, "The company is forging an online 4S showroom for second-hand cars, and making the deals more transparent and effective. The company will expand to more cities and provide higher standard services," according to the company's news release.
Renrenche was founded in 2014 with the aim to help car owners and buyers connect. The company said it only lists cars that are 6 years old or less, or which have been driven 100,000 km or less, and an assessment team examines 249 parts of the cars before listing them. It launched brick and mortar stores in July.
The website makes money by charging a 3 percent commission on the deals. Its monthly volume grew to more than 3,000 units in July from around 1,000 in April, and expected more than 10,000 units monthly volume by the end of this year.
The co-founder and vice-president Du Xiyong told the reporter that the company applied Internet technologies systematically to strengthen the effectiveness and restrain the variations in the process of evaluation and transactions.
"Each of our assessors has portable devices, and uses specialized software in evaluation etc. So we boosted the effectiveness two or three times that of traditional ways in every section of the procedure. All in all our system has tens of, even a hundred, times higher effectiveness."
The Ministry of Commerce data showed that about 7 million pre-owned cars were traded last year, and the volume this year is estimated at 10 million.
The pre-owned car markets in developed western countries have trustworthy third party assessment companies available. The assessment report gives ratings including recommended, or not recommended. Though usually paid for by sellers, the report is neutral and trusted by both parties in the deal.
The situation on the Chinese market is completely different. There's no such trustworthy third party assessment available, so all of the deals are a matter of asymmetrical information where professional sellers hide flaws, and where amateur buyers have to figure out the value of the car with inexpert eyes. So it often results in buyers paying more than they should, and then also having to put in more money for repairs on the car.
"The industry has very deep water. If you do not have an intimate pal in the industry, you will pay the tuition fee. You won't know the problem until you drive it for half a year or so," a second-hand car buyer in Beijing told the reporter.
Du said, "If our assessment does not reflect the actual situation, we will take the car back, and give a full refund. All the assessors' jobs are traceable. We also applied an after sales system to cover all the responsibilities. If a problem is spotted before the deal, we also will take back the car, and the guarantee lasts for one year."
"We only trade in top quality cars, only cars in superb and excellent condition are accepted," he added.
