Summary of Key Points
The car maintenance market is witnessing a fierce competition among Tuhu, Tmall, and JD.com, reminiscent of the intense battles during the food delivery wars of the past. Behind this competition lies a significant turning point in the trillion-dollar automotive after-sales market, which is shifting from being fragmented (dominated by small, family-owned businesses) to becoming more centralized (with the rise of chain brands). China currently has over 300 million vehicles in use, and the market size is expected to reach 1.85 trillion yuan by 2025, with the new energy after-sales market potentially growing to 2.9 trillion yuan. Each of the three players adopts a different strategy: Tuhu focuses on vertical integration (entering the market through tires and emphasizing store quality management), while JD.com and Tmall rely on internet expansion (leveraging their supply chain and traffic advantages to rapidly expand their network of stores). The competition has evolved beyond price wars to include deeper aspects such as reaching lower-tier markets, improving profitability per store, and integrating various services. In the next 3-5 years, the industry will undergo significant changes, and it is likely that a coexistence of different players will emerge, with those who successfully integrate products, services, and customer ecosystems gaining a competitive advantage.
I. Why has the trillion-dollar after-sales market suddenly become so popular?
In the past, car owners had to choose between expensive 4S dealerships or unreliable, small local businesses for car maintenance. This gap has now been filled by chain brands:
1. Large market size: China has over 300 million vehicles, and the after-sales market is expected to grow to 1.85 trillion yuan by 2025 at an annual growth rate of 6.2%, making it the most stable segment of the automotive industry chain (as new car sales are reaching saturation).
2. Upgrading consumer demands: Car owners increasingly seek transparency and standardized services, which chain brands can provide. Data shows that the proportion of chain businesses has increased from 16% in 2020 to 34% by 2025, while small local businesses have decreased from 84% to 66%, indicating a growing preference for chain brands.
3. The impact of new energy vehicles: The after-sales market for new energy vehicles is expected to reach 2.9 trillion yuan by 2029. Maintenance needs for new energy vehicles (such as battery and motor repairs) differ from those of traditional fuel vehicles, presenting opportunities for chain brands to capture this emerging market.
II. The current competitive landscape: How do the three players compare in scale?
A clear hierarchy has emerged among the three companies:
- Tuhu (the leader): Plans to have 8,008 stores by the end of 2025, with 162 million registered users and annual revenue of 16.5 billion yuan, as well as a net profit of 700 million yuan. Its strengths include nationwide coverage (in 75% of counties) and stable profitability (90% of its stores are profitable after six months of operation, with 44% of franchisees opening additional stores).
- JD.com Car Maintenance (second place): Aims to have 4,000 stores by the end of 2025, expanding rapidly through incentives and leveraging its supply chain (genuine auto parts and same-day delivery logistics) as well as its PLUS membership platform.
- Tmall Car Maintenance (third place): Currently has 3,200 stores, with a 22% increase in vehicle service requests and a 30% rise in gross profit. Recently, it integrated with Taobao’s flash shopping feature to attract new customers.
However, scale is just the surface; the real competition lies in the underlying business models.
III. Comparison of business strategies: Vertical integration vs. internet expansion – which approach is more sustainable?
The three companies have distinct strategies:
- Tuhu: A focus on vertical integration, starting with the most standardized product category (tires). After years of building a strong offline presence, Tuhu’s emphasis is on improving store quality rather than simply increasing the number of stores. For example, it manages inventory in advance and centralizes supply to reduce stock pressure on stores. Its customer repurchase rate is 65%, and franchisees are willing to reinvest due to the quality of services and trust built up over time.
- JD.com/Tmall: Adopting an internet-based approach, leveraging their supply chains (genuine products and fast logistics) and user traffic (e.g., through Taobao’s flash shopping). JD.com has engaged in price wars, while Tmall has integrated car maintenance services with its food delivery platform. However, both approaches have their weaknesses: Tuhu faces challenges in attracting enough traffic, while JD.com and Tmall need to improve their service operations.
IV. The focus of competition: Beyond price wars, it’s about building long-term barriers
The competition is no longer just about who has the most stores or offers the lowest prices; the key factors include:
1. Expanding into lower-tier markets: Tuhu has already covered 70% of high-potential counties, while JD.com and Tmall are targeting third- and fourth-tier cities to secure prime locations for their stores and attract experienced franchisees.
2. Profitability per store: Opening 1,000 stores is easy; maintaining profitability across all of them is challenging. Tuhu has proven its profit model, while JD.com and Tmall need to improve their service offerings (e.g., ensuring that franchisees make a profit and customers return for further services).
3. Ecosystem integration: The future competition will revolve around providing comprehensive services for new energy vehicles and the entire car owner’s lifecycle, including maintenance, car washing, insurance, and used car services. For example, who can effectively manage the maintenance of new energy vehicle batteries? These integrated services are crucial for gaining a competitive edge.
V. What’s the future outlook? Who will emerge as winners, and how will they coexist?
- Short term: Price wars will continue (with giants having ample resources to offer discounts and bundled packages), and small local businesses will be phased out, leading to an increase in chain brand dominance.
- Medium term: The focus will be on improving the profitability of each store. Tuhu needs to apply its successful models to lower-tier markets, while JD.com and Tmall must convert user traffic into long-term customer loyalty and profit.
- Long term: A coexistence of different players is likely, with each company holding its own niche (Tuhu in professional services, JD.com in supply chain efficiency, and Tmall in user traffic). It’s unlikely that one company will dominate the entire market. The industry may see a scenario where each player specializes in certain areas—e.g., Tuhu in specialized services, JD.com in supply chain efficiency, and Tmall in user experience.
Just as the food delivery wars changed how people eat, this car maintenance competition could transform car owners’ habits. As for who will win? Let’s wait and see…