Shanghai /PRNewswire/ - Casstime, the leading enterprise in China's automotive aftermarket, announced on October 30 (EST) that it had completed series C1 funding of USD 80 million. Sequoia Capital China and Source Code Capital were joint lead investors; long-standing shareholder Hua Partners followed on; and China TH Capital served as the exclusive financial advisor. In addition to five previous rounds of funding, including investments from influential institutions such as Fosun RZ and Shunwei Capital, Casstime has raised a total funding of nearly USD 200 million.
Casstime, based in Shenzhen, has won over the industry with its unique business model of "search engine + procurement platform", and its fast growth has stunned the markets. In just four years, Casstime has grown to become China's largest procurement platform for auto spare parts and accessories.
At present, Casstime operates in over 300 cities across China and features over 1,200 specially selected suppliers. More than 60,000 workshops are now their loyal customers, accounting for more than one million vehicle visits every month that inquire and purchase spare parts through Casstime.
According to the founder and CEO of Casstime, Overmars Jiang commented, "As before, the new series of funding will be used on technical research and development, services enhancement, and nationwide market development."
There are currently 250 million vehicles in operation in China. Figures from the World Bank Group indicate that there are 173 cars for every 1,000 people in China, compared to 837 in US. Moreover, the average vehicle age in China is just 4-5 years as compared to 11.8 years in US. Both the number of vehicles in operation and the average vehicle age in China are still increasing rapidly. There is massive potential for further growth in the trillion-dollar China's aftermarket.
However, China's aftermarket has yet to produce companies of size similar to its US counterparts like, NAPA or AutoZone, which have valuations over 10 billions of US dollars. "There are enormous differences between the US and China's aftermarkets," Jiang said. "Copying American models will not be successful here. What the China's aftermarket needs most are industry standards and credit systems."
American automotive aftermarket has been evolving for nearly a century, whereas China's aftermarket had exponential growth in just the past three to four decades. China's system of standards has been struggling to keep up as new vehicle models are launched with entirely new specifications every year. And most workshops in China must deal with so many different makes of vehicle from many vehicle-making countries.
The vast number of makes and models on the market presents a great challenge for the aftermarket supply chain. This is an enormous market of long-tail products; no single supplier can fulfill all of the spare parts needed. This is the commercial reality that rationalizes Casstime's platform model. Overmars Jiang said, "Due to the long-tail characteristic of auto parts, the rationale of the high-frequency product providers prevail over the low-frequency product providers does not apply. Casstime aggregates the low-frequency transaction of professional customers distributed over different suppliers, and cultivates them to become high-frequency behavior through its one-stop procurement platform."
China's aftermarket does not have industry standards for spare parts like PIES and ACES in the US, nor does it have a single industry-wide EPC (electronic parts catalogue). Workshops must use different EPCs to look up the parts for different vehicle makes, and part looking-up error rate by human is high in the industry. To make it worse, errors are only found out when parts are received by the workshops, which leads to a significant waste of resources.
Jiang noted, "China's automotive aftermarket is extremely huge, but the infrastructure is weak. Casstime is building technical infrastructure for the industry, just as important as paving a highway. We are using technology to solve the problems of efficiency and cost."
Casstime developed a Google-style search engine that helps users find the unique part number by entering the VIN and part name. Casstime search engine reduces the error rate associated with manual part number lookup from 5% down to just 0.03%. And Casstime brings search time down from minutes per part to less than a second.
Moreover, when searching, users can input the standard part name as seen on EPCs or they can search using colloquial variants, including local dialect. This function is extremely useful in a country as large and diverse as China, and was made possible by the deep aftermarket insights of Casstime's technical team. To date, the search engine is supporting over forty of the largest vehicle manufacturers, and the number keeps counting.
Once a user has the part number, Casstime runs a smart matching algorithm to assign multiple suppliers that precisely fit the user's past procurement behavior, quality needs, geographic area, delivery time requirement, etc. The workshop can then select the supplier it prefers, just as on an e-commerce sites like eBay and Amazon.
Another common problem is that the workshops may not have the technical skills necessary to service so many different makes of vehicle that they encounter. Casstime has set up a professional technician team that can provide remote technical support to workshops in order to help them deal with different vehicle makes and models. To improve operational efficiency of workshops, Casstime also offers a shop management SaaS called Workshop #1.
Casstime has earned the trust of many workshops and parts suppliers with its highly efficient online transaction, clear transaction and assurance regulations, and its reliable technical support.
Overmars Jiang said, "Casstime is an open platform. We welcome any supplier that can offer high quality services." Casstime integrates logistics service providers of auto parts and third-party providers of supply chain financing to construct an efficient network that provides quality value-added service to suppliers and workshops. By means of big data analysis on its transaction records, Casstime also offer recommendations for suppliers to optimize their inventory such that they can boost its turnover.
Kui Zhou, Partner at Sequoia Capital China, said, "Casstime grasped the perfect moment in the industry when infrastructure was weak and demand was high. With its SAAS/Data-driven model, Casstime determined its strategic path by constructing transaction standards and credit systems for the industry and quickly became the leader in this market. The Chinese automotive aftermarket offers a large arena, and we look forward to seeing Casstime remarkable performance continue and develop."
Source Code Capital Founding Partner Yi Cao said, "Vehicle parts is a classic case where the internet can reduce transaction friction. Using information technology, Casstime has enormously accelerated the part number lookup and matchmaking in the parts supply market. The Casstime model has already proved its value in the high-end vehicle market. As both upstream and downstream users become accustomed to the platform, Casstime's future growth is assured by its asset-light business model and powerful digital foundations."
Nathan Fu, Director of China TH Capital, said, "Technology is the biggest driver of change in any industry. Casstime used its leading technology to develop the biggest and most accurate database of vehicle parts in China's aftermarket. It then created an ecommerce marketplace which addressed the pain points of a market that lacked standardization, and as a result has built a data-driven supply chain platform. Overmars Jiang leads a pragmatic team that is committed to defining the transaction standards and building trust in the automotive aftermarket. As the leading enterprise in China, Casstime effectively drives the digital transformation in the automotive aftermarket. We are confident that Casstime will keep committing to its vision of technology and data, and will promise better experience for car owners in China."