While most stocks have been very weak of late, one name that has
bucked this trend is Uxin (UXIN 9.04, -0.31, -3.32%). The IPO, which debuted in June 2018, is the
largest used car e-commerce platform in China.
The company says it has transformed used car commerce in China. Its platform allows sellers to reach a broad audience and ensures that users have access to an extensive nationwide selection of used cars. Its offline infrastructure allows Uxin to provide services such as inspection, title transfer, and delivery of vehicles etc.
Its platform consists of: 1) Uxin Used Car, its 2C business catering to consumer buyers. It provides consumers with customized car recommendations, financing, title transfer, delivery, insurance referral, warranty, and other related services; and 2) Uxin Auction, its 2B business catering to business buyers. It helps businesses source vehicles, optimize their turnover and facilitate cross-regional transactions.
Uxin currently has a nationwide network of over 670 service centers across more than 270 cities that provides services at each step of the transaction cycle. This physical presence helps to cement its relationship with customers. Its title transfer service handles a potentially time-consuming and complex process for buyers. Its warranty program provides consumers with comprehensive after-sale protection.
The catalyst for the recent move in the stock was an early December announcement that Uxin and Taobao, China's massive and fast-growing consumer community, operated by Alibaba (BABA), entered into a strategic partnership. The two companies will collaborate in the areas of B2C and B2B used car transactions, integrated supply chain, and used car loan facilitation, to bring online used car purchasing services to consumers across China.
Uxin and Taobao will jointly establish an online used car shopping mall on Taobao Marketplace. In addition to the standard inspection report, the two companies will also provide videos and VR car viewing experience so that consumers can get a full understanding of the car's condition. Taobao users will now be able to purchase used cars from anywhere in China, anytime. Users will also be able to enjoy a full range of financing and post-transaction services.
Clearly this announcement was good news for Uxin, which gains access to Taobao's huge online platform in China. According to Kun Dai, Founder, Chairman and Chief Executive Officer of Uxin, who said “Over the past few years, consumers have become increasingly receptive to buying used cars as a cost-effective alternative to new vehicles. This is particularly the case for consumers in lower-tier cities. With extremely limited used car selection in most cities, there is rapidly growing demand for an online platform that expands access to used cars from across the country.”
China is the world's second largest automotive market and is forecast to become the largest automotive market by 2023. There are approximately 185 mln car PARC (registered cars) in China, compared with 275 mln car PARC in the US. Despite the scale of China's car PARC, the low car ownership rate and a large population indicate significant room for continued growth.
With all that said, Uxin still strikes us as somewhat speculative, so be careful. The stock was trading in the $3 area when this deal was announced. It has since tripled so it may be due for a near term pullback. But it's a name to keep on the radar as a play on the growing used car market in China.
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