Tuhu Car Inc., an e-commerce platform for automobile maintenance, has updated its prospectus on March 30 to debut on the Hong Kong Stock Exchange. This marks the company’s third submission of a prospectus and it is being jointly sponsored by Goldman Sachs, CICC, Bank of America, and UBS.
Tuhu, a Shanghai-based company established in 2011 with the goal of simplifying car maintenance, offers users various services and products such as tire replacement, car detailing, and automotive supplies. The company submitted its prospectus for an IPO to the Hong Kong Stock Exchange in January 2022. However, its application status was changed to “invalid” in July of that year because it did not pass the hearing within six months of submitting its prospectus. Tuhu resubmitted an updated listing application on March 30 after its previous prospectus became invalid again in March on the Hong Kong Stock Exchange.
According to the updated prospectus, as of the end of 2022, there are a total of 4,653 stores covering 302 cities in China. This represents a significant increase of 20.8% compared to the previous year. Additionally, the number of registered users has also increased by 22.3%, reaching a total of 95.5 million people compared to the previous year.
In 2022, Tuhu generated a total revenue of 11.55 billion yuan ($1.69 billion), but incurred a net loss of 3.29 billion yuan. Over the past four years, Tuhu’s gross profits were as follows: 520 million yuan in 2019, 1.08 billion yuan in 2020, 18.7 billion yuan in 2021 and finally, an impressive increase to reach up to 22.7 billion yuan in 2022 with corresponding gross profit margins of 7.4%, 12.3%, 16% and 19.7%.
According to Tuhu CEO Chen Min, the key to attracting offline users lies in offering quality products and services at strategic locations. However, this market is highly competitive with low margins and entry barriers. Therefore, instead of trying to monopolize the market, Tuhu’s strategy is to focus on segmenting markets and providing differentiated services while controlling costs through inventory reduction and cash flow management.
Chen emphasized that their goal is not just to acquire more customers but to return to the core principles of offline business. He believes that leveraging technology can help optimize cost control by reducing customer acquisition costs while improving user satisfaction.
In 2022, Tuhu and TÜV Rheinland, an internationally leading independent third-party testing, inspection, certification, training, and consulting organization, jointly launched a tire performance evaluation certification system. On March 29 in Shanghai, both parties held a certificate award ceremony where they issued China-mark certification certificates for 15 products from 10 well-known domestic and foreign tire brands.