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Cathay Cartech Fund Invests in Innovative Used Car Platform YouCKU

Cathay Cartech Fund Invests in YouCKU to Drive Digital Transformation and Increase Liquidity in China’s Secondhand Car Market

November 27, 2020 — Shenzen, China — The Cathay Cartech Fund recently announced the successful completion of a Series B minority equity investment in YouCKU, an emerging leader in the used car platform segment based in Shenzhen, China. The company uses its digital and data science capabilities to help OEMs, car leasing and rental companies achieve efficient and large-scale liquidity in used cars. Thanks to the additional funds, and with the help of its new partners at the Cathay Cartech Fund, YouCKU will accelerate its R&D and scale up its activities across China.

Since 2018, auto companies in China have suffered from growing inventory backlogs and increasing demand for capital investment in NEV. In response to the decline in new car sales and overcapacity, many companies have attempted to shift the business strategy with price-adjustments and rental operations, highlighting the growing importance of used car liquidity. However, the traditional used car trading model is inefficient, usually being traded at small scale from providers scattered across the country, which translates to expensive procurement costs. Meanwhile, the past few years has seen emerging online trading platforms focusing on B2C business models with unstable sourcing quality and huge online marketing expenses constantly impeding the sector.

YouCKU was established in 2015 to address China’s used car liquidity dilemma. The company uses digital tools to upgrade existing business processes, cultivate institutional car sources, and build a B2B-oriented secondhand distribution platform. In parallel, YouCKU takes the lead in deploying its innovative data-driven management business in China, providing OEMs and travel companies with residual value based automotive management services, stable high-quality sources, and efficient transactional services. Thanks to its services, standardization is enabled at all stages of the lifecycle, and its scale improves circulation efficiency. This not only provides a new impetus for increased liquidity in used cars, but also provides a cutting-edge platform for traditional Chinese car financial products.

YouCKU currently provides its comprehensive services to the top 10 car rental companies and for almost all OEMs in the market, including eHi Car Rental, Shouqi Car-hailing, FAW Travel, Guangzhou Automotive Leasing, Dongfeng Peugeot, Beijing Hyundai, FAW-Volkswagen, SAIC Volkswagen, etc. Its services cover more than 243 cities across the country, with thousands of franchises and many active secondhand auction platforms in the network.

YouCKU has 3 key service offerings:

1. Re-purchasing: Based on a self-developed big data system and tens of thousands of distribution channels all over China, it provides institutional car owners with new car purchase consultations, long-term residual value forecasts, and locked-in re-purchase services.

2. Basic vehicle liquidity: YouCKU has established delivery centers in more than 80 cities across the country, and its distribution channel partners are based in more than 250 cities. Its vehicle re-allocation network includes more than 400 cities and most regions, achieving nearly national coverage.

3. Transactions: YouCKU has partnered with tens of thousands of leading distribution channel partners to facilitate used car transactions.

Founder Shen Tianshi emphasized how sourcing the cars is core to the development of a used car platform. YouCKU tackled this issue by going upstream at the very start of used car liquidity. It uses its digital capability throughout the used car liquidity lifecycle to connect various players on the value chain, thus enabling more efficient and higher quality used car trading throughout China.

Li Maoxiang, Partner of the Cathay Cartech Fund, said:

“The used car market has been trapped for years in a cycle where profitability, scale and quality could not be balanced. YouCKU has broken the “Impossible Triangle” and the company’s business has achieved exponential growth in the past few years, is constantly expanding its partnership network as trading volume continues to rise. There are few companies that have positive cash flows and achieve rapid growth in the current red sea of the used car market in China. We are very optimistic about the team’s and the company’s future and we look forward to proving the viability of China’s used car market.”