(Yicai) Jan. 8 -- Jekun Auto has applied for bankruptcy due to a ruptured capital chain, the Chinese automotive maintenance firm said recently, as the country's auto aftersales market changes inexorably with the rise in popularity of new energy vehicles.

Jekun filed for insolvency on Jan. 3 and will proceed to liquidate according to the law, founder and Chairman Gao Jiqun said that day.

The insolvency is due to the three-year pandemic and the impact of the Chinese and global economic environment, making it difficult for the Guangzhou-based company to survive, said Gao, who is former vice president of beleaguered household device retailer Gome Electrical Appliances.

The popularity of electric vehicles has significantly affected the automotive aftersales service market, a former employee told Yicai. Cars powered by fossil fuels often need their engines serviced. But EV manufacturers control most of the batteries, motors and electronic control systems in electric cars, so that third-party service providers cannot replace or repair them, he added.

Although gas-powered autos still require quite a lot of aftersales services, small and medium-sized stores will usually become franchises of big industry giants to attract customers. Jekun Auto cannot give them enough business, the person said.

A franchise in Haizhu district, Guangzhou is still operating but no longer under the name of Jekun Auto, Yicai noticed on a visit. Jekun Auto’s bankruptcy will not affect operations, the store manager said.

Jekun Auto, founded by Gao in 2013, has raised over CNY400 million (USD55.9 million) in seven financing rounds since its inception, according to its website.

Editors: Dou Shicong, Kim Taylor