SK C&C (www.skcc.com) announced on April 24 that it joined forces with YunFeng Auto Sales, based in Shanghai, China, to found joint venture corporation ShangHai YunFeng Encar Used Car Sales Services LTD.
This joint venture is seen as the first signal to spread SK Encar’s reputation as a symbol of customer reliance into the China’s used car market.
If the used car business initiative in Shanghai, China, makes a successful project, it will provide momentum for entrance into not only the rest of China but also the markets of Southeast Asia and the neighboring regions.
SK C&C and YunFeng Auto Sales are investing a combined total of RMB 10 million into the venture. SK C&C Cengdu and YunFeng Auto Sales will own 49 percent and 51 percent of the corporation respectively, with its CEO appointed from SK C&C.
The foundation of the corporation will be completed by May, and it will launch and operate 2 to 3 used vehicle dealers in Hongkou and Jinshan.
SK C&C and YunFeng Auto Sales plan to develop this joint venture corporation into China’s best and most innovative used car business, based on the auto services content, business models and trained personnel secured by both companies.
YunFeng Auto Sales, which is an auto sales arm of China’s state-owned auto and energy enterprise Shanghai YunFeng Group posting annual revenue of KRW 12 trillion, sells auto parts and provides auto repair and information services through its 14 retailers in the Shanghai region, reporting KRW 800 billion in annual revenue with excellent brand awareness and consumer confidence.
ShangHai YunFeng Encar Used Car Sales Services LTD. will start its used car sales operation offline in conjunction with its existing auto sales businesses, forming a complete lifecycle of automotive business for YunFeng Auto Sales. The newly founded corporation plans to establish a differentiated trust-based used vehicle business model, using SK Encar’s automotive diagnostics services and know-how.
China’s used vehicle market is known to be entering its initial growth stage.
The Chinese auto market, the world’s largest with nearly 20 million new cars sold, is reporting only 6 million use car sales. Compared to the developed economies where used car sales volumes are usually 1.5 to 2 larger more than new-car sales, China’s used car market has the potential to grow into an enormous market of over 4,000 cars sold per year. Fully acknowledging the importance of the used car market, world’s major auto manufacturers, such as Volkswagen, Mercedes-Benz, and General Motors, are entering the market one after another with their own brands. However, the market in China is so far considered a notorious lemon market where consumers tend to shun because of lack of systematic diagnostics systems and varying prices.
Through the newly formed joint venture corporation, SK C&C plans to engage in protecting interests of consumers in China by improving market reliability, stamping out false advertising, and securing price transparency using the SK Encar business model. To do so, SK Encar is developing its already proven top-notch vehicle diagnostics system further to suit China’s market landscape to alleviate the mistrust the consumers have toward the used car market.
Senior Vice President Park Sung-cheol, head of SK C&C’s Encar Business Division, said “Through this strategic partnership with YunFeng Auto Sales, we will secure the number one spot in China’s auto sales industry, which will be much more respected and trusted by the consumers, and we will use SK Encar and its brand as a leverage to raise it into the most trusted and relied upon company in the global auto sales market.”
Meanwhile, SK C&C is accelerating its expansion of its reach in the global market both on- and off-line by founding on-line auto distribution corporation SK Encarsales.com in conjunction with Australia’s carsales.com.
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