Will Investors Pouring Billions Into Chinese Used-Car O2O Firms Get Run Over?

Investors are again throwing money at China’s online used-car e-commerce market. After a decade of massive new car sales, the Chinese used car market is growing fast and potential profits abound. But with the market highly fragmented and rival online-to-offline players burning cash faster than buyers can drive cars off the lot, one can’t help wondering if this market is about to crash, and which investors will get hurt.

There are eight major online used car buying platforms in China receiving major venture investment, plus a slew of smaller players. The eight largest players have raise US$1.89 billion in the last 12 months. Four of them, Uxin Group, Guazi.com, Souche.com and Chezhibao, have together raised US$1.1 billion since the start of 2017.

But rather than spending money on improving their product, most of the money raised is fundin...



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