## Cango’s Global Ambitions: Exporting Chinese Cars and Building a New Market
China’s leading car trading services provider, Cango Inc. (CANG), is making a bold move to expand its reach beyond its home market. The company is positioning itself as a key player in the global used car market, with a specific focus on exporting Chinese cars to emerging markets around the world.
This ambitious strategy is fueled by China’s recent rise as the world’s largest exporter of new cars. Cango is capitalizing on this trend by leveraging its expertise and infrastructure to facilitate the export of used vehicles. While Cango is not completely abandoning its domestic business, it is shifting its focus to the higher-margin and lower-risk business of facilitating vehicle trading between others, earning revenue through fees and related services.
The company’s international foray began with the launch of its AutoCango.com website in March 2023. Despite its early stage, AutoCango has garnered significant attention, attracting over 370,000 page views and nearly 60,000 registered users in just eight months. These figures represent a significant increase from the company’s older U-Car service, which has been operational for nearly two years. Cango’s CEO, Lin Jiayuan, attributes this success to the company’s strong emphasis on search engine optimization and other marketing efforts, resulting in over 2.41 million impressions on search result pages. He expects this number to surpass 4 million by the end of 2023.
While Cango has not yet specified its target markets for its global expansion, developing markets appear to be the most logical choice for the company’s used car exports. China exported approximately 4 million vehicles in the first eight months of 2023, a 39% increase year-on-year, with most exports going to developing countries like Russia, Mexico, the United Arab Emirates, and Brazil. Cango’s focus on used vehicles offers a unique opportunity to tap into this market without facing the same level of competition or trade barriers that new car exporters encounter.
However, the company recognizes the need to provide comprehensive support to less sophisticated buyers of used vehicles. Cango is actively collaborating with a range of partners to offer services such as vehicle inspection, customs clearance, and logistics, ensuring a smooth experience for international buyers. The company has already established customs clearance partnerships in four markets and is actively pursuing strategic investment opportunities to further strengthen its global network.
Back in China, Cango continues to develop its U-Car platform, which offers a range of services to third-party traders, including rapid vehicle inspection and listing services. While the company’s car trading services generated modest revenue in the third quarter, its overall revenue declined year-on-year as it transitioned away from direct car trading. However, Cango’s strong financial position, with approximately 3.8 billion yuan in cash and short-term investments, provides it with the resources to fund its global expansion and strategic acquisitions.
Investors seem to be embracing Cango’s new strategy, as reflected in the company’s stock price, which has nearly tripled in 2023. This positive sentiment suggests that investors are confident in Cango’s ability to navigate the challenges of international expansion and establish itself as a leading player in the global used car market.
Despite its early stage, Cango’s global ambitions are already making waves in the automotive industry. The company’s strong financial position, strategic partnerships, and focus on providing comprehensive support to buyers position it well for success in the burgeoning international market for used cars.
