Reporter | Zhou Qi Editor| Jiang Yuyue
In 2022, Tuhu Car Has ushered in a good start.
In January this year, it submitted a listing application on the Hong Kong Stock Exchange, officially launching an impact on the capital market. The co-sponsors are Goldman Sachs, CICC, Bank of America Securities and UBS Group.
According to the box office data of Maoyan Movie, "The Water gate bridge of Chosin Lake" sponsored by Tuhu Car has received a total of 2.648 billion yuan in cumulative box office (as of 16:30 on February 7), winning the Spring Festival slot.
This car service provider, which started by selling tires, has aimed at the blank Internet car service market from the beginning of its establishment, relying on the "online reservation + offline installation" car maintenance method, and has gained a firm foothold in the car service market.
The huge automotive service market also provides Tuhu with the opportunity to show its skills.
According to the china insight consulting report, the scale of China's auto service market has reached 1 trillion yuan in 2020, and it is expected to reach 1.7 trillion yuan in 2025, with a compound annual growth rate of 10%.
With user resources in hand, Tuhu Has become the largest community of car owners gathered by Chinese auto service providers, with 72.8 million registered users in its application and online interface.
Beautiful report cards don't bring good revenue data. According to the prospectus, from 2019 to the first three quarters of 2021, the cumulative loss of Tuhu Car exceeded 10 billion yuan. In addition, the company's cash flow is equally tight.
Can the listing provide more imagination space for Tuhu to raise cars?
Hit the three major pain points
More than a decade ago, "code farmer" Chen Min left the HP R&D center and joined a car insurance direct sales company instead, entering the auto aftermarket by mistake.
At that time, the automotive service market was facing three major pain points for a long time.
First, the customer experience is poor.
Due to the fragmentation and complexity of the auto service market, the existing services cannot fully meet the needs of car owners, and need to be strengthened in terms of convenience, service quality, product quality, genuine product guarantee, and affordable price.
Second, the supply chain is complex.
A car has thousands of incompatible parts, and the automotive service market is flooded with SKUs and unauthorized imitations. Coupled with the additional costs and market opacity generated by the traditional auto parts supply chain, consumers have difficult choices.
Third, the implementation of the contract is inefficient.
A large number of SKUs put pressure on the fulfillment process, and the traditional centralized fulfillment model has insufficient forecasting capabilities, resulting in a backlog of inventory in stores and dealers.
To this end, in 2011, Chen Min founded the Tuhu Car Network, which focuses on "price transparency", using tires as the entry point to enter the automotive service market.
In terms of customer experience, Tuhu has developed a set of proprietary technologies suitable for China's automotive service industry to digitalize the automotive service industry chain.
Through the digital system built by Tuhu, the owner can intuitively grasp the vehicle situation, the system can remind maintenance at a fixed node, display the cost of different services, and the owner can also see the real-time progress during vehicle maintenance.
In terms of logistics and transportation, Tuhu benchmarked "JD.com" and established a nationwide system integrating warehousing and logistics to ensure timely delivery of products.
According to the prospectus, as of September 30, 2021, Tuhoo has established 42 regional distribution centers and 374 front-end distribution centers across the country; its logistics infrastructure covers more than 300 cities in China, receiving and dispatching an average of 2.6 million tires and 10.5 million other auto parts per month.
In terms of auto parts, Tuhu has 1.3 million auto parts SKUs, has established stable cooperative relations with Brands such as German Horse Brand and 3M in the United States, and directly cooperates with more than 3,000 auto parts suppliers.
Consumer feedback is positive, according to the China Insight Consulting report, as of September 30, 2021, Tuhu Car Has 10 million monthly active users, with a total of 13.9 million trading users, an increase of 35.6% over the same period in 2020.
Stores are expanding rapidly
From 2013 to 2021, Tuhu Yangche received 16 rounds of financing, including many star capitals such as Hillhouse, Qiming Venture Capital, Legend Capital, Goldman Sachs, Carlyle, and CICC.
Tuhu, which does not lack financial support, has made efforts to offline "Tuhu factory stores" and "cooperative stores" as the focus of reaching end customers.
Tuhu factory stores are divided into two forms: self-operated and franchised. Self-operated stores define service quality and operational efficiency, aiming to create industry benchmarks, and franchise stores achieve rapid network expansion with asset-light business models.
The partner stores are mainly responsible for the installation of Tuhu's online sales products and services, which is conducive to further improving the efficiency of its supply chain.
With large sums of money as a backer and a good framework as the basis, Tuhu's expansion speed is getting faster and faster.
According to the prospectus, in 2019, there were a total of 20,166 factory stores and cooperative stores; by September 2021, the number of stores jumped to 36,592. Compared with the whole of 2020, the number of stores increased by 42% in 9 months.
"Brutal expansion" allows its stores to cover most prefecture-level cities, and the number of stores ranks first among independent domestic after-sales service providers.
Thanks to the continuous expansion of scale, Tuhu's annual revenue has increased year after year. According to the prospectus, Tuhu's revenue in 2019 and 2020 was 7.04 billion yuan and 8.753 billion yuan, respectively.
In 2020, despite the impact of the epidemic, the total revenue still increased by about 24.3% year-on-year; the gross profit also rose from 523 million yuan in 2019 to 1.08 billion yuan in 2020, and further increased to 1.312 billion yuan in the first three quarters of 2021.
However, over-reliance on partners has left Tuhu with endless troubles.
Cooperative stores can establish offline contact with car owners, and if there are better development channels, Tubu tigers as an "intermediary" can easily be abandoned.
On the other hand, Tuhu Car cannot guarantee the service level of franchisees and cooperative stores, and once the agreement is violated, Tuhu's brand reputation is difficult to maintain.
Black cat complaints show that Tuhu product quality related complaints accounted for the highest proportion, consumers said that the service level and technical ability of each store were uneven.
Middlemen are not profitable
Tuhoo faces widening losses and tight cash flow.
During the reporting period, Tuhu's losses were 3.428 billion yuan, 3.928 billion yuan and 4.435 billion yuan respectively, and the cumulative loss in the past three years reached 11.789 billion yuan.
This is not difficult to understand.
First of all, the middleman Tuhu mainly focuses on the transparent price of parts, and its profit mainly depends on "earning the difference", and the overall gross profit level is meager.
Taking the main business of tires and chassis parts as an example, in 2020 and the first nine months of 2021, the two revenues accounted for 48% and 43.6% of the total revenue, respectively; in the same period, the maintenance business revenue accounted for only 29.9% and 32.7%.
According to the prospectus, the gross margin of the tire and chassis parts business in 2019 was only 3.9%, and it increased to 8.6% in the first nine months of 2021, and the gross profit of the segment was 320 million, and the gross profit performance improved.
Compared with the gross profit margin of more than 20% for car maintenance, the profit margin of tires and chassis parts is still too small. This means that Tuhu has not tasted the real sweetness of the car aftercare market.
Secondly, in order to expand its popularity and spread channels, excessive marketing investment has also made Tuhu worse.
Tuhoo has been involved in film investments many times. In addition to this year's Spring Festival file "Chosin Lake Watergate Bridge", "Chosin Lake", "Emergency Rescue", "My Hometown and Me" and other film sponsor lists, Tuhu is impressively listed.
Prospectus data shows that in the first three quarters of 2020 and 2021, Tuhu's sales and marketing expenses accounted for 14.4% and 14.5% of its revenue, respectively.
The cash flow situation is equally worrying. During the Reporting Period, the net cash flow generated by Tuhu's operating activities was -252 million yuan, 331 million yuan and -455 million yuan, respectively.
"Losses and negative cash flows have been incurred from operating activities in the past, and we may not be able to achieve or maintain profitability or positive cash flows in the future." Tuhu Car said in the prospectus.
Tuhu Car is pinning its hopes on the listing. According to the prospectus, Tuhu plans to use the funds raised to participate in investment related to the car service of new energy vehicle owners, etc., which shows the "open source" ambition of laying out the new track.
Tuhu, which uses a typical Internet-style playing style, wants to exchange short-term losses for long-term market share, which can be described as a dangerous move. Tmall Car and Beijing Tokyo Car Will be the "pro-son" of the Internet manufacturer, the traffic pool is huge, and the saved diversion fee can be used to subsidize customers and seize the market.
It is not so easy to share a piece of cake from the trillion market.
Source: Tuhu Car Official Weibo
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