Youxin Financing For Survival: The Dilemma Of Used Car E-Commerce Is Hard To Break

Recently, Uxin. Us, an e-commerce company for online trading of second-hand cars, announced that Youxin and Weilai capital and joy capital have officially signed a financing agreement with a total potential of up to 315 million US dollars. In addition, convertible bond holders such as Youxin group 58, TPG and Warburg Pincus intend to convert their convertible bonds of US $69 million into ordinary class A shares of the company.

After the news of new financing, Youxin failed to gain the confidence of investors in the secondary market. On June 16 and 17, Youxin shares fell 12.93% and 12.64% respectively. By the end of June 21, Youxin's latest share price was $3.79, with a market value of $1.453 billion.

Youxin, it seems, has lost its former unicorn, the first used car e-commerce shares and other halos. The year 2020 is the freezing point of Youxin. The annual revenue will drop by 64.55%, only 563 million yuan, while the loss will further expand to 2.623 billion yuan. Since the second half of last year, the stock price of Youxin has been on the edge of US $1 for a long time, and it did not rise significantly until April this year. At the same time, a series of problems, such as "routine loans", "false transaction data", "tight capital flow", "layoffs" and "the departure of senior executives", also make Youxin frequent crises.

It is worth noting that on June 10, five days before the new financing announcement of Youxin, the parent company of second-hand car of melon seeds, cheduo group also announced that it had obtained $300 million in new financing.

Since Renren car fell into a huge crisis in 2019 and the impact of the epidemic since 2020, the second-hand car e-commerce industry in the capital market has not been as popular as it was in the past two years. The business model has not been established, the profitability has not been verified, and with the support of new financing, can Youxin and melon seeds return to the high light moment?

After more than seven years of financing war, money burning war, mode exploration and strategic transformation, no one knows whether the used car e-commerce can survive.

Youxin lost more than 10 billion yuan in five years

According to public data statistics, from 2011 to January 2017, Youxin group completed a total of US $1 billion in round e financing. On June 27, 2018, with the aura of "the first share of used car e-commerce", Youxin landed on NASDAQ.

Overall, the business performance and financial situation of Youxin are not optimistic.

According to the financial report, from 2016 to 2020, the total operating revenue of Youxin was 825 million yuan, 1.951 billion yuan, 659 million yuan, 1.588 billion yuan and 563 million yuan respectively, and the net losses were 1.393 billion yuan, 2.748 billion yuan, 1.538 billion yuan, 1.990 billion yuan and 2.623 billion yuan, respectively. The accumulated net loss in five years is more than 10 billion yuan, and it is difficult to make up for the loss in a period of time.

By the end of 2020, Youxin's total assets were 1.455 billion yuan, total liabilities were 3.308 billion yuan, and the ending balance of cash and cash equivalents was 1.185 billion yuan.

For Youxin, which is facing a huge survival crisis at this time, harvesting new financing can undoubtedly relieve the huge pressure.

However, despite the harvest of new financing, compared with the net loss of 2.62 billion yuan last year, the new financing may only be enough for Youxin to spend one year, which is undoubtedly like drinking poison to quench thirst.

Youxin has been listed and its business performance is not good. It seems that it is not a cost-effective business to invest in Youxin at this time. So, what did the investors behind take a fancy to Youxin?

It is worth noting that the leading investor of Youxin's current round of financing is Weilai capital. Li Bin, chairman of Weilai and management partner of Weilai capital, and Dai Kun, CEO of Youxin, have known each other for a long time. Li Bin has participated in the financing of Youxin since the angel round. According to Youxin, Li Bin and Dai Kun have been focusing on the travel industry for many years, and the possibility of more cooperation between the two sides can not be ruled out in the future.

It is worth noting that on January 3 this year, Weilai launched the official second-hand car NiO certified to carry out the official second-hand car business in its own way. After making up the last piece of puzzle, Weilai is trying to build a vehicle life cycle service closed loop basically.

From the perspective of business relevance, there is a certain correlation between the two. Some industry insiders told the 21st century economic reporter that Youxin's evaluation and detection system and vehicle condition analysis model in the used car industry are important factors in attracting external cooperation.

Of course, from the objective situation, with the increase of China's car ownership and the maturity of consumption, China's second-hand car industry has great development potential.

At present, China is the world's largest new car consumer market, twice as much as the United States, but the scale of second-hand cars has exceeded 10 million a year, but less than half of that of the United States. According to the data of China Automobile Circulation Association, in 2020, the actual sales ratio of used cars to new cars in the United States will be 2.4:1, while that of China will be 0.4:1. Overall, China's second-hand car market has a lot of space.

How to find the break even point of used car E-commerce

Around 2015, the number of used car e-commerce advertisements appearing in corridors, buses, subways, movies and TV dramas has gradually decreased in the past two years. Through a huge advertising war, several used car e-commerce companies in the head quickly gained popularity and became the favorite of the capital market. Supporting these entrepreneurial stories are the rapid development of China's e-commerce as a whole and the future expectation of the huge scale of the used car industry.

In the first half of the second-hand car e-commerce, the financing war and the advertising war were all over the place, and the mode dispute had come to an end. Entering the second half, the key problem that the used car e-commerce must solve is: how to use the funds on hand to reach the break even point as soon as possible.

If the losses continue to increase and the funds are in trouble, as it is difficult to get capital support as before, it will be impossible to continue to live without hematopoietic capacity. The second-hand car e-commerce companies have no chance of trial and error.

The original intention of the second-hand car e-commerce is to realize the standardized operation of the second-hand car market through big data and scale effect, and change the opaque phenomenon and transaction disputes caused by the previous cattle trading through standardized pricing.

However, at present, in the past few years, as a special product, the second-hand car has one situation and one price. The main contradictions and problems in the second-hand car market have not been solved. The second-hand car e-commerce has only changed a trading scene. The visible market is still the main scene of the current used car market.

On the whole, the second-hand car e-commerce mainly tries to achieve further development through automobile finance and switching to offline.

Both Youxin, Guazi and renrenrenche have entered the field of auto finance from the perspective of financial leasing. Automobile financial leasing is a kind of cash installment payment method, which separates the ownership and the use right in the rental service, and transfers the ownership to the lessee after the lease ends.

Financial leasing business is a legal and compliant financial product, while "routine loan" is a financial fraud activity that illegally encroaches on the borrower's property. However, in the actual scene, used car financial leasing is often mistaken by consumers as "routine loan", and various used car e-commerce companies have caused various consumption disputes in the past few years.

According to the financial report of Youxin used car in 2018, the personal loan income for C-end contributed 1.774 billion to Youxin, accounting for 53.5% of the total income. In 2018, the number of used car loans accounted for 46.1% of the total used car transactions, while the average service rate of used car loan services increased to 7% from 6.2% in the same period in 2017. The main revenue comes from the provision of financial services, and Youxin looks more like an auto finance company.

In July 2019, Youxin financial transferred to golden pacer of 58. After divesting its financial business, Youxin group has shifted its strategic focus to national purchase business, and melon seeds and renrenche have also invested in this area for a long time. In this mode, all used car e-commerce platforms set up hypermarkets in cities across the country, get used car sources from original owners and used car dealers, display them online on the platform, and sell them to potential consumers of second-hand cars in physical stores.

"Once upon a time, used car e-commerce companies chanted the slogan of" no middleman can make price difference ". Now they are just like middlemen. What they earn is this price difference." Second hand car dealers told reporters.

However, although the market scale of second-hand car e-commerce is very large, the profit is meager. Only through reasonable price collection and bidding, and the rapid realization of vehicle transaction, can the objective profit be achieved, which also contains huge risks.

Generally speaking, the business model and path of used car e-commerce have been on a similar development path. The competition among different companies is mainly focused on brand, service and consumer trust. It is not clear who can live to make a real profit.

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