Reporter Gong Mengze

Entering the second half of 2023, the automotive aftermarket, which has experienced a long-term downturn, has ushered in a long-lost industry benefit.

First, on September 9, Tuhu was listed on the main board of the Hong Kong Stock Exchange, becoming the first Hong Kong listed company in the independent automotive aftermarket market. Immediately afterwards, on October 26, the Ministry of Commerce and other 10 departments jointly issued the "Guiding Opinions on Promoting the High-quality Development of the Automotive Aftermarket" (hereinafter referred to as the "Guiding Opinions"), which clarified the overall goals and main tasks of the development of the automotive aftermarket and promoted the high-quality development of the automotive aftermarket.

The industry generally believes that as a derivative of the automobile industry and a hot land to be reclaimed, the automotive aftermarket will usher in an outbreak after more than 10 years of tortuous development. This is a good opportunity for capital and enterprises, a new track containing trillions of yuan, and a knockout race.

Promote the development of the automotive aftermarket

On October 10, the Ministry of Commerce and other 12 departments jointly issued the "Guiding Opinions", proposing policy measures in seven aspects, including optimizing the circulation environment of auto parts, promoting the quality and upgrading of auto maintenance services, and optimizing auto consumer financial services.

The "Guiding Opinions" put forward that by 2025, the scale of China's automotive aftermarket will grow steadily, the market structure will be continuously optimized, the level of standardization will be significantly improved, the role of the aftermarket in the automotive industry chain, value chain and innovation chain will be more prominent, and the development of new formats and new models will be more mature.

"China is the country with the largest number of cars. The reason why the "Guiding Opinions" was issued at this time, and it was jointly issued by 9 departments including the Ministry of Commerce, is mainly because the automotive aftermarket has great demand and contributes a lot to the national economy. Zhang Xiang, a researcher at the Automotive Industry Innovation Research Center of North China University of Technology, said.

So, how big is the market volume of China's automotive aftermarket?

An Qi, a veteran of the automotive aftermarket, told reporters that the market volume of the automotive aftermarket is affected by the number of cars and the age of the car. According to the latest data from the Ministry of Public Security, as of the end of September 2023, the number of motor vehicles in the country has reached 9 million.

In terms of average car age, An Qi told reporters that the average age of passenger cars in China is more than 6.2 years, and it is expected to reach 2027 years by 8, while the average age of the United States and EU member states in the same period is 12.5 years and 12.6 years respectively.

New energy vehicles are also accelerating to become an important part of the automotive aftermarket, and their maintenance and repair require more professional and environmentally friendly technologies and products. "The charging and swapping infrastructure, maintenance services and automotive supplies of new energy vehicles have received more and more attention from the government and relevant departments." Chai Xiaodong, director of the Mobility Industry Economic Research Center, told the Securities Daily reporter that this also provides broad development and investment opportunities for relevant enterprises and investors.

"It is expected that in the next 5 to 10 years, China's new energy vehicle aftermarket will give birth to 100 to 200 start-up companies that can enter the capital market to publicly issue shares." Shi Jianhua, deputy secretary-general of the Electric Vehicle <> People Association, said.

The golden decade of the automotive aftermarket

Throughout the development history of China's auto aftermarket, from the beginning, climax, turning point, and then to the decline and disappearance, the capital era of the auto aftermarket has gone through a full decade.

Between 2013 and 2014, capital carried the genes of the Internet and targeted the trillion-dollar market of the automotive aftermarket. At that time, the B2C e-commerce model penetrated into all walks of life, and models such as car wash O2O, car repair O2O, and door-to-door service O2O came into being.

Since 2015, capital has accelerated its attack on the aftermarket. According to the reporter's incomplete statistics, in 2015, in the narrow automotive aftermarket, including car services, car washes, and SaaS (automotive software services), 144 financings were completed throughout the year, with a cumulative amount of 85.42 billion yuan, of which 2% of the financing cases were invested in O<>O companies.

In 2017, O2O companies that had previously obtained financing were still difficult to effectively acquire customers, stabilize profits and even form a closed business loop by relying on the light model, so the asset-heavy model became the second option. In this context, many auto parts supply chain platforms, auto service chains and data supplier enterprises have been established successively, relying on capital Dongfeng to embark on the road of asset-heavy operation.

In 2019, the auto parts supply chain platform began to launch pre-A round and A round financing, and this trend continued into 2021. It is worth mentioning that in 2022, one-third of the 15 financing cases in the automotive aftermarket will be door-to-door car wash O2O. After that, the automotive aftermarket eventually moved towards a full-scale retreat.

The launch of Tuhu has boosted the aftermarket. According to the data, Tuhu was founded in 2011, starting from tire sales, and Tuhu has gradually expanded its business to the entire automotive aftermarket. After experiencing operational difficulties and worsening losses, Tuhu submitted three applications to the Hong Kong Stock Exchange in January 2022, August 1 and March 2022. It was not until August 8 this year that Tuhu finally passed the listing hearing of the Hong Kong Stock Exchange, becoming the first Hong Kong stock listed company in the independent automobile after-sales service market.

Commenting on the reasons for Tuhu's successful listing, Zhang Fan, partner of D&G Advanced Manufacturing and Mobility Industry, boiled it down to two points: First, it is driven by the macro market outlook. China's car ownership and age level basically reach the standard of the mature period of the automobile market; The second is the proper path of enterprise development.

Zhang Fan believes that in view of the small, scattered and chaotic aftermarket service system, Tuhu chose a relatively high-frequency and highly standardized project in automobile after-sales service, and carried out the integration and transformation of the "Internet + branding" system, which not only met the diversified needs of automobile users, but also successfully established an independent new standard in the relatively untrusting aftermarket, and successfully built a brand image and cognition.

Standardization and specialization have become a breakthrough direction

In general, the standards of the automotive aftermarket are still not uniform, and the degree of informatization is also very low, especially in the sinking market outside the first and second-tier cities, almost all of them are "acquaintance business". Due to the non-standard quality of store services and auto parts, and the opaque price of service auto parts, consumers are extremely distrustful of this market.

In Zhang Fan's view, the listing of Tuhu has a good enlightenment effect on the industry. When advanced equipment and management become the industry standard and costs are more controllable, brand trust will gradually replace price advantage. "In the future, consumers' favor for brand products will continue to increase, and the amplification of brand effect will make enterprises need to pay more attention to brand building and maintenance, which will help broaden profit margins." Zhang Fan said.

In Anqi's view, operational standardization and brand specialization mean that products will be more secure, and services and prices will be more transparent. Process standardization and talent professionalism, digital operation accuracy, service items, brand building and maintenance will become the key to the competition in the automotive aftermarket.

From the perspective of auto repair companies, the auto aftermarket will enter the era of "professional dividends" from the era of "opportunity dividends", because car owners have a more rational sense of consumption and are willing to pay for professionalism. The survival logic of auto repair enterprises in the future is either to do fine and specialized in subdivided fields, solve the difficult and complicated diseases of car owners, and establish stores with professional ones; Or make it bigger and more complete in all fields, solve the one-stop needs of car owners, and set up a store with all-round. (Securities Daily)