JD.com Taps Automobile Aftermarket Services Industry With Acquisition
Zhang Xia
/SOURCE : Yicai
JD.com Taps Automobile Aftermarket Services Industry With Acquisition

(Yicai Global) Dec. 1 -- Chinese tech giant JD.com Inc. [NASDAQ:JD] has acquired a group to tap into the automobile aftermarket services industry as demand grows, China Economic Net reported.

Aftermarket activity often accounts for 50 percent to 60 percent of the market share in developed countries' automobile industrial chains. It accounts for about 10 percent in China. JD.com confirmed yesterday that it had acquired Tqmall and introduced business-to-business (B2B) services.

Founded in 2014, Tqmall was operated by Hangzhou Xuanchao Inc. Tqmall has over 30,000 physical stores offering vehicle repair and maintenance services. JD.com did not disclose the acquisition price. It was around USD45.34 million (CNY300 million), an insider said.

The business will expand its proprietary products with the addition of B2B services, and then it will form collaborations with manufacturers and distributors, covering at least 500,000 kinds of products, said Qing Yan, head of JD.com's automobile aftermarket services. JD.com will continue to seek auto maintenance partners.

Over 30,000 auto parts outlets in China have partnerships with JD.com. JD.com will establish a complete industrial chain connecting distributors, maintenance companies and consumers, JD.com Vice President Xin Lijun said.

Demand for aftermarket services is tied to vehicle age and tends to be higher for cars over three years old. Maintenance demand is highest for vehicles more than six years old. China had over 200 million cars with an average age of about five years as of June.

China has more than 400,000 vehicle maintenance shops. Costs in the industry have remained high and service quality varies greatly. Complicated distribution networks and sporadic sales activity trouble some companies trying to cater to car owners.

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Keywords: JD , Automotive Aftermarket