SoftBank bets $1.5 billion on China used-cars

Hong Kong: SoftBank Vision Fund is investing $1.5 billion in Chinese car trading platform Chehaoduo Group, placing another major bet on the world’s largest automobile market.

The investment values Chehaoduo, the parent of online sites Guazi and Maoduo, at more than $9 billion (Dh33 billion), a representative for the start-up said. It intends to use the money to develop technology in data and cloud computing, the company added in a statement.

SoftBank Group Corp. and its Vision Fund, the world’s single largest pool of tech investment capital, have poured billions of dollars into the world’s second largest economy. They’re a backer of Didi Chuxing, the ride-hailing service that ran Uber Technologies Inc. out of the country, as well as social media giant Bytedance Ltd. and AI player SenseTime Group Ltd.

Chehaoduo, backed by social media and gaming giant Tencent Holdings Ltd., competes with the likes of Uxin and Souche in a segment that’s remained largely resistant to disruption. Dozens of start-ups — including Chehaoduo and Didi — are now trying to employ artificial intelligence to help users compare pricing, secure auto-financing and gain access to after-market services. Chehaoduo said it will improve services in down payments, second-hand car trading and after-market services via more than 600 physical stores.

“The global automotive industry is experiencing unprecedented change,” Mark Yang, Chehaoduo’s chief executive officer, said in the statement. “The application of big data and artificial intelligence is the key to fundamental reform of automotive retail in China.”

The investment adds to SoftBank’s growing portfolio. Its Vision Fund has taken stakes in more than 70 start-ups around the world including Uber and shared-office giant WeWork Cos. In China, its investments include logistics operator Full Truck Alliance Co. and online education start-up Zuoyebang.

“China’s used car market is growing rapidly but online penetration remains low and auto financing is underutilised compared to developed markets,’ Eric Chen, a partner at SoftBank Investment Advisers, said in the statement.