Souche bags more funds as Chinese car trading heats up

The Hangzhou-headquartered startup raises $578 million as investors continue to chase opportunities in the Chinese online car marketplace – providing they are private.

Does it make a big difference if a company is public or private in the same sector? When it comes to automobile sales in the world’s most populous country, the answer for now appears to be a resounding 'yes'.

China's market for online car sales is currently in intriguing shape with valuations in the private sector soaring and public companies shedding value as investors pour billions of dollars into private auto trading platforms while selling off their listed counterparts.

The latest example is Souche. The privately held automobile trading app said on Monday that it had raised $578 million from a group of new and existing investors, sealing its fourth major funding round in less than two years and the sector’s second-biggest private fundraising ever.

The Hangzhou-headquartered startup said Primavera Capital and Morningside Venture Capital led its latest round of funding. Other investors include Alibaba, China-Russia Development Fund, Sunshine Insurance, Dreamfly Capital, Lingfeng Capital and ClearVue Partners, which is impressive considering how Souche is currently not among the eight biggest players in the sector (see table below). 

 Monday’s deal means Souche has raised a total of $1.2 billion since November 2016 , when it raised $100 million from Ant Financial and Ucar. In May 2017 Souche raised $180 million from Warburg Pincus, and in November last year it raised $335 million from Alibaba and Primavera, among others.

Souche is not the only Chinese car trading platform to tap private capital in the past two years.

Cheduohao, the company behind China’s third-biggest auto trading portal Guazi, raised $818 million from the likes of Tencent, Singapore’s GIC PrivateIDG Capital, and Yunfeng Capital in March. A month later Renrenche raised $300 million from Goldman Sachs, Tencent and Didi Chuxing.

All these happened at a time when publicly traded auto-trading apps were falling out of favour with investors.

One example is Yixin Group. The car trading and financing platform, which completed its HK$6.8 billion ($867 million) initial public offering on a high note in November last year, has since lost over two-thirds of its value.

Uxin's share price has also sunk about 35% since the rival auto trading platform went public in the US in May, while Bitauto, another US-listed car trader, has lost as much as 40% of its value since the beginning of the year. 

An industry  source said auto trading platforms generally suffer in the public market because public investors tend to be less tolerant of companies incurring huge losses. Most, if not all, Chinese auto trading platforms are yet to book a profit because they are still at the stage where they have to spend massively on advertisements and discounts to grab market share.

All three listed Chinese car trading platforms are still in the red. For example, Bitauto's net loss for the 2017 fiscal year was Rmb1.43 billion ($219 million), more than four times its loss a year earlier, while Yixin’s net loss at Rmb18.3 billion was 12 times more than in 2016.

Private investors are generally more receptive towards loss-making firms, as long as they have strong growth prospects and are well placed to create significant value in the longer-term. Also, some private equity investors have opt-out rights that allow them to exit the investment at a higher price – regardless of whether a company is profitable or not at the time, the industry source said.

Souche is among the second-hand car trading platforms actively looking to break into the market for new car sales. With the additional firepower gained through its latest funding it hopes to enter into agreements directly with car manufacturers and help them clear their inventories by reaching a larger group of potential buyers online.

Souche said it expects its total transaction volume this year to exceed Rmb350 billion, more than double the volume achieved last year.

China’s Top-8 Car Trading Apps 


Market Share

Major Shareholders

58che ( 


General Atlantic


Che168 (Autohome) 


Baillie Gifford


Guazi (Cheduohao) 









Warburg Pincus




Tiger Global Management



GSR Ventures

Taoche (Bitauto) 



Warburg Pincus




Goldman Sachs


Didi Chuxing

Source: Gongpingjia (Chinese user-car valuation service)

¬ Haymarket Media Limited. All rights reserved.
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