April 30, 2006

Organized chaos & the certification myth in China’s used car industry

Filed under: Automotive — Administrator @ 4:14 pm

One of the greatest fallacies in the used car industry is that “certification” (i.e. certified used car) is the key to a successful business, specifically a web-based marketplace. Investors/entrepreneurs who look to certification as the holly grail are not only naïve but also setting themselves up for glorious failure.

In truth, certification is more of a marketing stunt than anything else whereas interest rates and inventory are two ingredients, when successfully harnessed/understood, will ensure a business has at least a fighting chance.

Over the course of the next several days, we’ll explore this subject in a bit more detail – this coming on the back of a month that saw China’s used car market go from an industry highly fragmented to somewhat more organized (at least, potentially).

This somewhat organized chaos is the result of two significant announcements from Manheim (US) and Quinland (Japan).

Companies such as Manheim (and the dozen or so other auto related online/offline platforms) who have either formed partnerships or have existing brand recognition have, perhaps, positioned themselves to completely monopolize the industry for the foreseeable future (at least, phase one). Given the depth (and diversity) of the competition — several of which have recently received funding — it is highly unlikely a start-up can claw its way into the forefront of this business (that is without specializing vertically) let alone look for a public exit…

Gentleman, start your engines…

No Comments »

No comments yet.

RSS feed for comments on this post. TrackBack URI

Leave a comment

Copyright © 2004 - 2012 | Ymer Venture Capital Asia (Hong Kong) Ltd.