On May 10, with the listing of ZEEKR Automobile in the United States, Cao Cao Travel also submitted a prospectus to the Hong Kong Stock Exchange to apply for listing, and Cao Cao Travel is likely to become Li Shufu's tenth IPO. However, unlike the previous nine IPOs, Cao Cao's core business is far away from the automotive industry.
In 2023, Cao Cao Travel will achieve an operating income of 10.668 billion yuan, with a year-on-year growth rate of 39.8% in the same period against the background of a high performance base. The company's gross profit margin showed a continuous improvement trend during the reporting period.
The status quo of the industry and the competitive landscape
With the exception of Didi, most ride-hailing platforms are losing money, and the ones that have gone public have not been smooth sailing. Before Cao Cao's listing, Kuaigou Dache and Didi both landed on the exchange, but neither of them could get rid of losses. With the submission of prospectuses by platforms such as Cao Cao Travel, Tick Travel, and Ruqi Travel, the industry seems to have ushered in a "spring". However, the financing of any online ride-hailing platform is often accompanied by a new round of user subsidy wars, which reflects the severe situation of homogeneous competition in the industry.
In contrast, Cao Cao Travel has found another way to reduce the cost of drivers through customized cars, so as to achieve more cost-effective travel options and attract users. In Li Shufu's automobile ecology, Cao Cao Mobility plays a special role and needs to carry the market of Geely's customized operating vehicles. Cao Cao Travel reduces the cost of drivers by customizing cars, which indirectly improves the cost performance of users.
TCO model vs. driver cost
Cao Cao's core business model is customized vehicles. By partnering with Geely Automobile Group, Cao Cao provides customized vehicles to drivers, reducing operating costs for drivers and providing more cost-effective travel options. According to the prospectus, compared with pure electric models on other platforms, the average total cost of ownership (TCO) of Cao Cao's customized vehicles has been reduced by 36.4%. This customized vehicle model not only reduces costs, but also improves the user experience and strengthens the stickiness between users and the platform.
Cao Cao Mobility adopts the TCO (i.e., the total cost of the vehicle over its life cycle, and the TCO of the shared travel vehicle includes the purchase/lease cost, energy supply cost, service cost and other components) model to reduce the driver's cost by customizing the car. This effectively hedges a portion of the subsidy and allows drivers to earn more. Cao Cao Travel also marked the words "xxx yuan per day" on the customized car to attract more drivers to join.
The custom car mode not only reduces costs, but also improves the user experience. Cao Cao Travel accurately meets the needs of passengers and drivers through customized vehicle mode, and improves the durability, maintainability and intelligent ability of vehicles. Cao Cao has also developed an AI-driven intelligent decision-making system called "Cao Cao Brain" to improve operational efficiency and user experience. These measures have enabled Cao Cao to gain wide recognition and reputation in the industry.
Dependence on aggregator platforms and complete abandonment of user operations
Cao Cao's success doesn't depend entirely on custom-built vehicles. In recent years, Cao Cao's dependence on third-party aggregation platforms such as AutoNavi and Meituan Taxi has been increasing, and the contribution from aggregation platforms has been increasing to 73.2% of the total order transaction. Cao Cao's total customer acquisition costs (including user subsidies, commissions paid to third-party aggregator platforms, promotion, advertising and customer referral subsidies) are also increasing year by year, with RMB450 million, RMB580 million and RMB780 million respectively from 2021 to 2023.
This dependence has brought about an increase in traffic, but it has also exposed some problems with Cao Cao's travel, such as the instability of traffic and the rise in commission costs. Cao Cao Travel needs to be driven by the aggregation platform to find more user entrances to improve user stickiness and brand recognition.
In terms of market share, although Cao Cao ranks third in the GTV rankings, there is still a certain gap compared with the industry leader Didi. The main challenges faced by Cao Cao on the user side are the lack of loyalty and price sensitivity of users. Although customized cars reduce the cost of users, their market share is still small, and it is difficult to expand their influence on the user side.
summary
In terms of financial performance, Cao Cao Travel has performed well in 2023, with a surge in revenue and a narrowing of losses. This is due to the company's full embrace of third-party aggregation platforms and the success of the customized car model.
Cao Cao still faces many challenges, such as the instability of relying on aggregation platforms and the competitive pressure on the user side. In the future, Cao Cao Travel needs to further strengthen the customized car model, provide better services on the user side, and find more user entrances in order to achieve sustainable and stable development.