China’s Craigslist is buying a car auction platform

Online classifieds site 58.com is purchasing the enterprise car auction unit of troubled second-hand car selling platform Uxin for $105 million in cash.

Why it matters: The purchase marks the sale of another major asset from used car seller Uxin in its year-long struggle to stay afloat, complicated by slowing car sales from the Covid-19 outbreak.

• After announcing pay cuts in February, Uxin has suspended an unknown number of its employees from working beginning in March due to “operational difficulties.”
• China Passenger Car Association said that the country’s passenger car sales fell 79.1% year on year in February, when the Covid-19 outbreak peaked in the country.

Details: NYSE-listed 58.com, known as China’s Craigslist, has entered into a definitive agreement with Nasdaq-listed used car dealer Uxin to purchase its business-to-business online used car auction business for $105 million cash, the company announced on Tuesday.

• The transactions are expected to close by the first half of 2020 subject to customary closing conditions.
• The purchase of Uxin’s B2B used car auction platform “directly complements” 58.com’s used car business, Michael Yao, chairman and CEO of 58.com, said in the statement. The deal will expand the number of options offered to dealers, he added.
• Beginning as a B2B business, Uxin gradually shifted its strategic focus to its consumer-facing business. The company’s revenue from its enterprise-facing unit dropped 62.5% year on year to RMB 71.7 million ($10.1 million).
• In response to the news, Uxin shares traded up nearly 14% to close at $1.4 per share on Tuesday.

Context: 58.com led a $230 million purchase of convertible notes from Uxin in May last year. Tuesday’s announcement follows Uxin’s move to divest its loan facilitation business in July to Golden Pacer, another of 58.com’s portfolio companies in which it holds a 32.6% stake.

• Uxin raised $225 million in a downsized initial public offering on Nasdaq in June 2018. The company’s shares have traded under its offering price of $9 since its debut.