UXIN - Cango Reduces Risks At Home Looks Overseas For New Opportunities | Benzinga
Key Takeaways:
- Cango’s revenue has fallen sharply in recent quarters, including an 88% drop in the first quarter, as it downplays its self-operated car-trading service to reduce inventory risk
- The company launched its Autocango cross-border car trading platform in March, aiming to tap foreign demand for used Chinese cars
By Doug Young
As China’s auto market slows after years of breakneck growth, car trader Cango Inc. (NYSE: CANG) is following many of its peers by looking outward for new opportunities. But such a dramatic shift for the domestically focused company will take time – a reality that’s reflected in its latest quarterly report that shows plunging revenue but steady profits as Cango becomes more cautious at home while starting to build a new cross-border car trading platform.
In looking abroad, Cango is following a recent trend that saw China nearly catch or even overtake Japan to become the world’s biggest auto exporter last year, depending on which statistics you look at. That surge has been driven in part by China’s huge production capacity for new energy vehicles (NEVs), as Beijing prioritizes development of that sector.
China’s car exports rose 63.7% last year to 4.1 million vehicles, while domestic sales rose by a much slower 4.1%. China’s domestic auto market has been steadily slowing since peaking at 24 million annual vehicle sales in 2017. Domestic sales last year totaled 21.9 million vehicles, down 9% from the peak, as consumers grow increasingly cautious on big-ticket purchases in a slowing national economy.
"In the first quarter of 2024, the Chinese automotive industry continued to encounter significant challenges,” said Cango CEO Lin Jiayuan. "Traditional automakers are under pressure to transform and adapt to the new energy era and emerging new energy vehicle manufacturers are facing intense market competition and severe profitability struggles.”
Cango started out as an auto financier but has nearly wound down that business and began shifting to car-trading services more than two years ago. It initially obtained a big part of its car-trading revenue ...