After the resignation of former chairman Chen Yizhou, Happy Auto, which was born from Renren, began to seek "happiness" in the field of car manufacturing. As the second used car company in China to go public in the United States, Happy Auto was once considered a new opportunity for Chen Yizhou after the defeat of Renren. Although it was successfully listed more than four years after its establishment, Happy Auto did not go all the way but fell into a loss dilemma. After the acquisition of Haitao Car, Chen Yizhou left office and the happy car with a big change of blood in the team began to change. After announcing its entry into the caravan market, Happy Auto set its sights on the hot new energy vehicle market and said that it would "build new energy vehicles".
Industry insiders believe that happy cars, as used car dealers, have enough channel advantages after entering the car. But car building is a technical job and requires a lot of capital investment, which is a hurdle for happy cars that continue to lose money. Although the prospects for new energy vehicles are good, at present, many companies have entered the market to make the car-making track crowded, and how to break through in the competition is also a problem that Happy Automobile needs to think about.
Building new energy vehicles?
The fiery new energy vehicle market may usher in new entrants. According to news, Happy Auto announced that it will set up a new energy vehicle department and set up a new energy vehicle research and development, production and marketing team.
It is understood that Happy Auto, formerly known as Renren Automobile, is a high-end second-hand car dealer group in China under Renren. In 2015, Happy Auto entered the used car industry as an auto finance business, and in 2017, it officially entered the retail of used cars and focused on used car trading services. Up to now, Happy Auto has formed a business model composed of self-operated high-end second-hand car store business, platform empowerment of small and medium-sized dealers business and used car value-added and after-sales business, from online to offline, from finance to after-sales Happy Car.
With the change of consumption concept, consumers' acceptance of second-hand transactions has increased significantly, which in turn has prompted the second-hand car market to usher in development opportunities. The data shows that in 2019, the cumulative transaction volume of used cars in China was 14.9228 million units, an increase of 7.96% year-on-year. In May 2019, Happy Auto was listed on nasdaq, becoming the second used car company in China to successfully list after Uxin. At the time of listing, its self-operated business has covered 14 cities across the country, opened nearly 20 stores, and cooperated with nearly 1,000 small and medium-sized second-hand car dealers.
Why does Happy Auto, who came from the used car business, build a car? The Beijing Business Daily reporter contacted the relevant person in charge of Happy Automobile, but did not get a reply as of press time. However, the industry generally believes that the reason for attracting Happy Auto is the good development prospects of new energy vehicles.
According to the data, the production and sales of new energy vehicles in the first half of this year were 1.215 million units and 1.206 million units, respectively, an increase of 2 times year-on-year. Yan Jinghui, a member of the expert committee of the China Automobile Dealers Association, said that new energy vehicles have become the direction of development, and the related industrial chain is also in the outlet period, both the capital and consumer markets are optimistic about the development prospects of new energy vehicles, which also attracts many enterprises to enter the market. As one of the enterprises in the field of second-hand cars, Happy Auto has sufficient channel support to provide many conveniences for entering the market to build cars.
The Beijing Business Daily reporter noted that affected by the news of Happy Auto's entry into the new energy vehicle market, Happy Auto's stock price soared by 89.22%.
Dilemmas change
In fact, for Happy Auto to enter the market to build cars, the good new energy vehicle market is "far water", betting on the car to get rid of the current business dilemma is the "near thirst" to be solved.
In 2018, After selling Renren, Renren CEO Chen Yizhou said that he would concentrate on the domestic second-hand car retail business. After changing hands to Renren.com, Chen Yizhou pinned his hopes on the happy car. At the beginning of the listing, Chen Yizhou, chairman of Happy Automobile, said: "The online second-hand car business is very expensive, and we have done too much money-losing Internet business, so I said that in the future, we will try to do money-making business." He believes that Happy Auto is different from the mainstream second-hand car e-commerce platform in the market, and it is not a company that can survive by burning money.
However, under the gradual increase in the volume of second-hand car transactions, Happy Auto, which focuses on the second-hand car industry, is "not happy" and has never reached Chen Yizhou's profit target. According to the data, the revenue of Happy Auto in 2017-2020 was $117 million, $431 million, $335 million and $33.16 million, respectively, while the net loss was $28.695 million, $89.532 million, $69.068 million and $5.32 million, respectively. In terms of liabilities, the debt ratio of Happy Auto in 2017-2019 was 99.65%, 136.46% and 95.35% respectively.
Under the long-term loss, the stock price of Happy Automobile fell below $0.5 per share several times last year. From August to October last year, Happy Auto's stock price hovered around $1 per share for a long time. According to the SEC regulations, if the price of listed company stock is less than $1 per share, and this state lasts for 30 trading days, NASDAQ will issue a warning, and if the warned company still cannot take appropriate measures to save itself to change its stock price within 90 days of the warning, it will be announced to stop trading. This means that Happy Auto will face the risk of delisting.
In order to turn the situation around, Happy Cars began to seek change. In November last year, Happy Auto announced that it had signed a binding investment letter of intent with Haitaoche, an import car e-commerce platform. According to the announcement, Haitaoche will merge with the newly established wholly-owned subsidiary of Happy Automobile, and after the merger, Haitaoche will continue to exist and become a wholly-owned subsidiary of Happy Automobile.
It is worth mentioning that after the merger, the senior management of Happy Auto has also changed. It is reported that after the completion of the merger, the shareholders of Haitao Automobile will hold 51% of the shares of Happy Automobile and have the right to appoint most of the directors of Happy Automobile. Happy Auto CEO Ji Chen and COO Xie Jinfeng resigned as CEO and CHIEF Operating Officer of the company respectively. Lin Mingjun, the founder of Haitao Car, will be the new director and chief executive officer (CEO) of Happy Motors. At the same time, in May this year, Happy Auto once again issued an announcement that chen Yizhou, the former chairman of the board of directors, resigned from the board.
The outlook is uncertain
Happy Car, which broke away from Chen Yizhou, embarked on a different development trajectory than before. In June this year, Happy Motors announced that it was in talks with a leading domestic caravan retailer, and it was possible to cooperate in the future in terms of RV sales, leasing, etc., and it was also possible to explore opportunities for the development and production of electric RVs. Two months later, Happy Motors announced its entry into the new energy vehicle market.
Industry insiders believe that happy cars that continue to lose money are seeking new breakthroughs after a period of adjustment. Domestically, motorhomes have been tepid, but with the transformation of tourism and consumer travel patterns, the market will face a period of industry development. At the same time, new energy vehicles are also a popular industry, and Happy Auto hopes to survive in the unpredictable market.
However, the prospects of the new energy automobile industry are good, but the competition is becoming more and more fierce. In addition to Tesla, which continues to play the price reduction card, the new domestic car-making forces have also formed a "Wei Xiaoli" pattern, and the traditional car companies based on fuel vehicles have also accelerated their transformation, while IT companies such as Huawei and Xiaomi have also been killed. Whether Happy Car, which started as a second-hand car, can open up new breakthroughs has become the key.
At the same time, compared with the second-hand car industry, the threshold for building a car is obviously higher. Not only do enterprises need to have technical reserves, but also have sufficient financial support. At present, there is not a car company in the new domestic car-making force to achieve profitability, Weilai Automobile CEO Li Bin once said: "There is no 20 billion yuan to build a car." "This is a real problem for Happy Auto, which has been deeply involved in the used car industry for many years.
However, industry insiders believe that Happy Auto is not without opportunities. First of all, Happy Auto has certain advantages in the channel, and can save money in future store expansion. At the same time, with the cooperation with nearly a thousand small and medium-sized used car dealers, happy cars in the future can also create a complete closed loop from sales to used cars. A second-hand car dealer said that one of the reasons hindering the development of new energy vehicles is the retention rate. This means that with its advantages in the used car industry, perhaps Happy Auto can create a model that is in line with its own development.
Beijing Business Daily reporter Liu Yang liu xiaomeng