Digging Deep into Tier 3-6 Markets, Shenma Chuxing Announces $20 Million Series A Round | FreeS Fund Deal News
Driving the new energy industry toward digitalization, consumerization, and servitization in the circulation sector
" Investor Perspective
Li Feng, Founding Partner, FreeS Fund
Email: feng@freesvc.com
"As a leading player in consumption downshift, Shenma Chuxing has a first-mover advantage in its tier-three and tier-four city footprint. Meanwhile, under national policy guidance, the gradual transition from fuel vehicles to new energy vehicles creates a convergence of dual advantages that makes Shenma Chuxing's NEV industry internet platform both viable and full of potential."
"
Digging Down a Thousand Meters
NEV Industry Internet Platform Shenma Chuxing Raises $20 Million in Series A Funding
Source: Shenma Chuxing
Shenma Chuxing, the industry's first new energy vehicle (NEV) industry internet platform, recently announced the completion of its $20 million Series A round in January 2019. The round was led by Korea Investment Partners (KTB) and FreeS Fund, marking the company's third financing round within the past six months.
The proceeds will primarily fund Shenma Chuxing's end-to-end layout across the NEV circulation value chain — strengthening upstream supply chain infrastructure, upgrading mid- and back-office operational efficiency and technology systems, and expanding its team.
According to sources, shortly after its founding, Shenma Chuxing secured nearly RMB 100 million across two consecutive rounds from investors including Tongcheng New Materials, a domestic A-share listed company. Throughout the capital market downturn of 2018, Shenma Chuxing continued to attract strong investor interest, further validating the vast potential and trillion-RMB scale of the NEV industry track.
Chen Xiaofeng, CEO of Shenma Chuxing, said: "We are fully committed to cultivating this track for the long haul. We need to not only look ten thousand meters ahead, but also dig a thousand meters deep. Shenma Chuxing will continue to focus on tier 3-6 markets, using diversified channels as our foundation and connecting upstream, midstream, and downstream players through data, intelligence, and financial leverage. We aim to maximize our enablement of traditional automakers and dealership operators in their transformation and upgrading within the emerging NEV market. At the same time, we'll work with partners to improve the full industry chain and full lifecycle services for NEVs — from production, transaction, finance, warehousing, and logistics to after-sales service. By improving circulation and operational efficiency at every step, we will build an 'NEV industry internet+' platform in the distribution space and create entirely new commercial ecosystem value, driving the digital upgrade of the entire NEV industry toward smart mobility. We have the patience, confidence, and resilience to deeply cultivate the downshift market."
Reshaping the NEV Mobility Distribution Market
In 2018, China's passenger vehicle sales reached 22 million units, with NEV passenger vehicles accounting for 1.008 million units — approximately 5% of the total, up 88.5% year-over-year. According to industry big data projections, by 2028, passenger vehicle sales will hit 38 million units, with NEVs' share rising to 30% or 11 million units, representing a market exceeding one trillion RMB.
Looking at the 2018 sales distribution of NEVs across city tiers, it's clear that as tier-one and tier-two cities impose driving restrictions and purchase limits while less developed regions experience steady economic growth, the center of gravity for NEV consumption is rapidly shifting toward tier-three and tier-four cities. The downshift market harbors enormous commercial opportunity.
Bolstered by the "dual-credit" policy, the NEV sector is currently evolving from a crowded field of vehicle manufacturers to a large-scale restructuring spanning distribution channels, after-sales markets, used car systems, and NEV finance — creating genuine opportunities to build a platform-based, integrated NEV industry structure.
Sustained Focus on NEV Mobility Services in Tier 3-6 Markets, Building a Channel-Centric NEV Industry Internet
1. Scalable Store Development, Building the Largest NEV Distribution Network in Downshift Markets
Leveraging advantages such as low barriers to entry, multi-brand offerings, modular design, and light-asset operations, Shenma Chuxing achieved scalable growth in just over six months, with thousands of channels rooted in tier 3-6 markets. To date, Shenma Chuxing's offline network covers 201 cities across 28 provinces, with 1,000+ township partner locations and 300+ county-level standard stores, having cumulatively sold over 20,000 NEVs. Over the coming year, Shenma Chuxing's retail footprint will continue to expand steadily, ensuring that tier 3-6 users can conveniently and quickly access NEV products nearby and purchase quality models that suit their needs.
2. Flexible Multi-Type Partnerships, Gradually Strengthening Upstream Supply Chain, Centralized Procurement and Customization, Reverse Enablement
In 2018, Shenma Chuxing established partnerships with 13 top NEV sales and production companies including BAIC Group, JAC, JMC, Cheetah Mobile, Soueast, Chery Automobile, and Karry. On the supply side, it offers 16 mainstream best-selling models and 2 customized models.
In 2019, the company will continue to deepen and solidify its supply chain system, collaborating with OEM R&D capabilities to continuously enhance the richness and market competitiveness of its platform vehicle lineup. By building a quality upstream vehicle source matrix, it will provide product saturation support for dealership channels while optimizing circulation links and improving delivery efficiency. Through reverse enablement of upstream supply chain partners, it will gradually achieve "production determined by sales, separation of production and sales."
3. "Transaction + Finance + Services," Completing the Operational Loop, Strengthening Service Capabilities, Building Competitive Moats
As channel systems connect and supply chains mature, Shenma Chuxing will gradually transform from strong channel and supply chain capabilities into strong service capabilities. It will focus on overlaying after-sales service downshift and internet+ vehicle service extensions, further empowering dealerships as OMO frontline positions. According to sources, in the coming months, Shenma Chuxing will collaborate with channel partners nationwide to launch a "online-offline + customer acquisition + smart store upgrade" hundred-store iteration plan, exploring a complete set of NEV retail methodologies that can be implemented in downshift markets to help dealership operators improve single-store operational capabilities.
On the financial leverage front, Shenma Chuxing will deepen existing partnerships with banks and other compliant financial institutions, integrating financial empowerment channels to provide diverse and more flexible financing options for C-end consumers, helping dealership operators improve profitability.
On warehousing and distribution, Shenma Chuxing is initiating and will continue to push forward the construction of digital warehousing, logistics, and platform after-sales service systems, maximizing supply chain circulation and operational efficiency, and gradually building a complete commercial ecosystem loop covering the full vehicle lifecycle, solidifying the infrastructure for NEV channel internet services.
4. Upgrading SaaS New Retail System, Building ToB/ToC Marketplaces, Exploring Data-Driven "People, Goods, Place" Enablement
Shenma Chuxing has made initial progress in developing online SaaS management tools centered on dealership operators. In 2019, it will continue to upgrade and refine this SaaS system, improving operators' store management and operational efficiency. Simultaneously, it will build ToB and ToC marketplaces, further strengthening data matching and traffic empowerment across "people, goods, and place," helping operating stores better achieve user online-ization, product online-ization, and transaction online-ization management.
5. Strengthening Talent Pipeline Development, Providing Robust Support for Platform Scalable Growth
Shenma Chuxing currently employs 200+ people. Its core executives come from the mobility industry and internet sector, bringing diverse perspectives and strong execution capabilities in NEV sales and internet operations. In 2019, Shenma Chuxing will continue to strengthen its composite talent pipeline, providing solid talent reserves for the platform's rapid, scalable development.
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