Chinese online used car trading dealer Uxin (NASDAQ: UXIN) has entered into definitive agreements to sell its B2B platform to online classifieds marketplace 58.com (NYSE: WUBA) for USD 105 million, according to press releases issued by both companies.
The transaction is expected to close by the first half of 2020. Uxin shares hiked nearly 14% to USD 1.40 apiece at market close on Tuesday, while 58.com also registered a 4.61% increase in its stock price, which closed at USD 49.22 per share.
Online classifieds giant 58.com, which is already an investor in Uxin, said the firm’s auction business directly complements its used car business.
“We are already a leading B2C player in the industry that generates significant consumer traffic to used car dealers in China,” said Michael Jinbo Yao, chairman and CEO of 58.com, adding that with the addition of Uxin’s B2B auction platform, the firm could offer more options to dealers.
On the other hand, Uxin’s chairman and CEO Kun Dai commented that by completing this transaction, Uxin will focus on developing its B2C online transaction business.
“Our B2B business is where we began our journey exploring market opportunities in China’s used car industry years ago. As we expanded into the retail market, we have gradually shifted our strategic focus to the 2C business,” Kun said.
The deal comes after Uxin started suspending employees and cutting salaries to cope with operational issues stemming from the coronavirus crisis, KrASIA reported at the beginning of March.
Affected workers would receive the minimum wage based on the local laws in their jurisdiction of employment and will return to work after the company recovers, while those who have not been suspended from work will receive a 20–40% salary cut until May, Uxin said in an internal letter, adding that the firm’s senior management will also take a pay cut of over 40%.
Some high-level executives have departed the company. Qiu Hui, Uxin’s chief technology officer, was the latest to leave the firm on February 28, although she will remain a consultant for Uxin Group, the company told 36Kr.
Business in China’s used car sector has plummeted during the coronavirus outbreak, as people are reluctant to visit brick-and-mortar stores to purchase secondhand vehicles. As of February 24, only 39.1% of used car dealers in China have resumed operations, according to The Paper, citing data from the China Automobile Dealers Association.
Founded in 2011, Uxin enables consumers to buy used cars online through its online platform and offline services. The firm has over 1,200 franchise service centers in 230 prefecture-level cities throughout China. The firm is expected to release its earnings report this week.
China’s answer to Craigslist, 58.com, launched in 2005, and is backed by Tencent. It is the country’s online classifieds marketplace with the most monthly unique visitors. The company reported revenues of about RMB 15.58 billion in 2019, up 18.6% year-on-year.
