Cathy Innovation recently completed an investment in Lechebang, China’s largest mobile car maintenance and services platform that uniquely leverages 4S (“Sales, Spare parts, Service, Survey”) shop networks. This $40M series-B round of financing was led by Far East Leasing, along with Cathay Innovation and existing investors, Sequoia China, Joyson Electronics and Vertex Ventures.
The Chinese automotive industry has entered a new phase, characterized by the slowing growth of new car sales, and, as the car population expands and the average car age increases, the increasing growth of the car aftermarket. With 190 million cars on the road today, with an average car age reaching 5.2 years in 2022 – which means that more and more cars are getting out of their warranty period – the demand for maintenance and aftermarket services is expected to explode. The Chinese aftermarket market is expected to grow to close to a trillion RMB this year.
The car maintenance and aftermarket services sector is still highly fragmented, and 4S shops represent 70% of the market – independent roadside workshops represent the remainder. Lechebang is uniquely positioned to leverage the spare resources in 4S shops and its advanced data and transactional platform to provide Chinese car owners with a mobile-first, one-stop-shop, car maintenance experience with competitive prices and highly customized services. Lechebang has more than 10 million registered users, cooperates with nearly 3,000 4S shops and covers 24 cities.
This investment illustrates the on-going commitment of Cathay Innovation to the automotive and mobility sector, catalyzed by the world-class resources, knowledge and experience brought to the portfolio companies in this sector by its limited partners Valeo, Michelin and Total.
Jinwen LIN, founder and CEO of Lechebang, said: “I believe the 4S shop market in China is severely underdeveloped and has a tremendous development potential catalyzed by mobile services and a better allocation of capital. Lechebang plans to deepen its cooperation with 4S shops across the countries, and we will keep expanding our geographical footprint to build China’s largest car maintenance network. We are thrilled to welcome Cathay Innovation as an investor and to gain access to Cathay Capital’s global resources and sector expertise, which we believe will support the fast growth we expect in the coming years.”
Nicolas DU CRAY, Partner at Cathay Innovation, said: ”by uniquely leveraging underused offline maintenance service resources and by making them available to car users via mobile phones, Lechebang is a perfect illustration of the kind of innovative business models China is able to create. By creating new business opportunities for our investors, the company will also be fully integrated in the Cathay Capital ecosystem, which aims to facilitate cooperation between innovative companies and large companies, and to add value through increase connections between China, Europe and the US. We are thrilled to add such an exceptional team to our family of entrepreneurs.”