Wen | Zhang Yi
Companies born in the last wave of O2O boom, it is difficult to survive to the listing, but catch up with the Internet tide.
On January 24, Tuhu Yangche submitted a listing application to the Hong Kong Stock Exchange.
At that time, Tuhu Car was still a combination of the "gold" market and the "burning money for scale" model of car rearguards, but the number of the prospectus made people see the cold loss facts more clearly, which can be called another example of "xue capital wool, serving users".
Driven by the large and growing number of cars and the increasing age of vehicles, the size of China's automotive services market is still expanding. According to the China Insights Consultation Report, according to the GMV, this figure is expected to reach RMB1,650.8 billion by 2025, with a compound annual growth rate of 10.0%.
According to the prospectus, Tuhu's revenue increased by 24.3% from 7.04 billion yuan in 2019 to 8.753 billion yuan in 2020. In the first three quarters of 2021 as of September 30, Tuhu's total revenue was 8.442 billion yuan, an increase of 41.8% over the same period last year, and the year-on-year growth rate exceeded the overall level of the industry.
Under the rapid growth of Tuhu Car, it has been "blood loss" for many years. In the first three quarters of 2019, 2020 and 2021, its net losses for the period were 3.428 billion yuan, 3.928 billion yuan and 4.435 billion yuan, respectively, and the cumulative loss exceeded 10 billion yuan. From the perspective of the net loss ratio during the period, the first three quarters of 2019, 2020 and 2021 were 48.7%, 44.9% and 52.5% respectively.
The net loss ratio remains high, and its operating loss ratio also rose from 8.9% in the first three quarters of 2020 to 11.1% in the same period of 2021, illustrating the challenges of its operating status.
With great potential but bleeding listing, is the automotive aftermarket really a good business?
Carry the load forward at a low gross profit
When Tuhu Yangche was born, it had the label of "online and offline integration", but from the perspective of gross profit margin, its comprehensive performance could not reach the high gross profit of online services, and it was even difficult to compare with the gross profit margin of traditional 4S stores.
As of 2019, 2020, and as of September 30, 2020 and September 30, 2021, Tuhu's gross profit was RMB520 million, RMB1.1 billion, RMB790 million and RMB1.3 billion, respectively, with gross profit margins of 7.4%, 12.3%, 13.4% and 15.5%. Although the gross profit margin is already increasing, this data is not very good in the industry.
Previously, some media reported that a financial director who worked in an Audi 4S store said that under normal circumstances, the gross profit margin of 4S store maintenance is less than 50%.
Why is it difficult to improve the gross profit of Tuhu's car?
From the perspective of revenue structure, comprehensive automotive products and services are the main source of revenue for Tuhu Car, accounting for more than 90% of the total over the years, followed by platform services based on franchise services and advertising services, accounting for a relatively small proportion. Obviously, at present, the platform role of Tuhu car maintenance has not been realized, and it mainly relies on basic car maintenance and maintenance services for blood transfusion.
In the integrated automotive product service category, tires and chassis components occupy a core position, accounting for 43.6% in the first three quarters of 2021 and 32.7% in car maintenance.
(Details of Tuhu's income structure)
In fact, in the tire and chassis parts service on which Tuhu car breeding relies, the role of the former is only a role similar to that of a "dealer", and the profit margin is not large.
According to the prospectus, from 2019 to the first three quarters of 2021, the gross profit ratio of Tuhu's revenue segmented was 3.9%, 7.8% and 8.6%.
The improvement of gross profit margin mainly depends on the initial emergence of the ecological effect of automobile services, Tuhu Yangche directly cooperates with many brand parties to optimize the supply chain, and delivers user needs to brand suppliers through C2M capabilities to form customization. However, it is still difficult to escape the "middleman" who earns the difference, and the profit ceiling is too low, which means that the gross profit margin of tires and chassis parts is difficult to increase significantly.
Tuhu Car is also aware of this problem, so in recent years, the proportion of car maintenance services with a gross profit margin of 26.1% has gradually increased. The tire and chassis parts business fell from 52.4% in 2019 to 39.8% in the first three quarters of 2021.
In the auto repair industry, it is often necessary to increase added value by improving efficiency and service quality, thereby increasing gross profit margin.
But it is worth mentioning that for Tuhu Car, the real high gross profit is actually a platform service (gross profit margin of more than 80%), which may be the future growth space.
At the same time as the low gross profit, Tuhu Yangche is also facing huge sales and marketing cost pressures to expand the market.
According to the prospectus, in 2019, Tuhu's sales and marketing expenses accounted for 14.7%, while the company's gross profit margin in the same year was only 7.4%. In the first three quarters of 2021, such expenses were 14.5% and the company's gross profit margin was 15.5%, showing the possibility of being close to profitability.
Because the gross profit is low and a single order does not make money, Tuhu Car needs to occupy a larger market from two levels to form a "quantitative change": one is to expand the scope of opening stores; the other is to increase the repurchase rate and increase the lifetime value of customers. Both require branding and traffic attraction, resulting in high marketing costs.
For the first stage of the company, it is usually more urgent to seize the market to form a scale, and Tuhu's way of playing is also very "Internet".
(Image source: Tuhu Yangche official website)
Tuhu Has three modes: self-operated stores, franchised stores and cooperative stores. Self-operated stores are the effect of proofing, franchised stores can further form a scale effect, and it is the cooperative stores that really form penetration.
As of September 30, 2021, its Tuhu factory store network includes 202 self-operated stores and 3167 franchised Tuhu factory stores (managed by 1538 franchisees), with 33223 cooperative stores.
Overall, Tuhu Car is "reducing the burden" for itself, expanding the channels of cooperative stores to be lighter, and helping to split into a real platform service provider.
Before the listing, Tuhu, which could not make blood, mainly relied on financing to survive. According to the prospectus, in 2020 and 2021 alone, Tuhu Car has received a total of $600 million in financing.
However, unlike the digital story of the primary market, the secondary market pays more attention to real money and silver, and Tuhu Yangche's application for listing will face more questions.
As of the end of September 2021, Tuhu's cash and cash equivalents were $1.43 billion. Can't help but worry: three years of losses of tens of billions, how long can the cash flow of more than one billion yuan support?
At the same time, Tuhu car maintenance is also a VIE structure, because the listing of Chinese stocks in the United States has been blocked, and its listing rhythm has been repeatedly delayed, making "families that are not rich even worse".
From making spreads to doing technical services
In 2021, the tide of bloody listing of emerging technology companies continues to break. Storytelling alone does not reassure the secondary market, and the profitability of Tuhu's car needs to be solved urgently
The automotive after-sales service market has set off a wave of internal rolls, and 4S stores are particularly prominent: annual salary of 300,000 car anchors, 8-on-1 service, Starbucks afternoon tea. The more varied the phenomenon, the more it shows the fierceness of the "robbery war" in the automotive after-sales service market.
Monks have more meat and less meat, the traffic is tight, and Tuhu's car breeding cannot escape this industry test.
Through the accumulation of burning money in the early stage, Tuhu has a certain market foundation. According to the prospectus, as of September 30, 2021, the Tuhu Car app and PC website had 72.8 million registered users. According to the China Insight Consulting Report, its monthly active users reached 10 million in September 2021, becoming the largest community of car owners gathered by Chinese auto service providers. As of December 31, 2020, Tuhu's Customer Net Promoter (NPS) was 51.9 and its brand recognition rate was 85.1%. In September 2020, its repurchase rate was 62.9%.
The pace of burning money to expand the market can be slowed down, and tapping the value-added space of existing users has become the key to the increase in Tuhu's car revenue.
Therefore, Tuhu Yangche also hopes to tell a story of "growth flywheel": on the one hand, improving the customer experience can bring more user traffic, improve the repurchase rate, supplier bargaining power, etc. On the other hand, it can also be fed back to the platform with enough data and product upgrade ideas.
(Schematic diagram of the flywheel effect of Tuhu car)
According to the prospectus, in the year ended September 30, 2021, the number of Tuhu factory stores increased by 55.9%. Over the same period, the average number of monthly active users increased by 37.4%. The growth rate of monthly active users is lower than the number of stores opened, which also makes it questionable whether its growth flywheel can continue to operate.
In terms of data value, Tuhu has two major roles on the platform of car owners and suppliers - either to increase the consumption scenario of car owners and let car owners pay more money, or to lower the price of suppliers and increase their gross profit margins.
For example, on the owner side, Tuhu Car breeding explores providing second-hand car trading services, or providing marketing services such as refueling coupons. On the supplier side, the use of C2M customization to improve profit margins.
In addition, Tuhu Yangche hopes to use its experience in the supply chain to form a SaaS solution for brands. At present, Tuhu Yangche mainly provides management tools for brand owners, such as enterprise resource planning, warehouse management system, distributor management system, mobile sales assistant, order management system, e-commerce platform and store management system.
Compared with the car maintenance services where middlemen earn the difference and the added value is not high, the path of technical services is the direction with the highest gross profit margin. But for Tubu Car, which is currently heavily marketed and has a very low proportion of research and development (5.2% in the first three quarters of 2021), there is still a long way to go, and saaS penetration still needs a while.
The shift from middleman to technology service provider is not a simple one-time move. For Tuhu Car, whether it is from the owner or the supply chain side of the derivative business will face no small challenge.