Online-to-offline (O2O) vehicle maintenance firm in China, called Bopai, which was valued at $600 million, the biggest of the market, revealed on Tuesday that it closed its operations because of bankruptcy. It is the 8th O2O automobile service company to shut down in the nation since 2015.
Many in the market failed due to intense competition for low prices– offering vehicle maintenance services at unsustainable cheap costs to attract clients.
Consumers had the ability to purchase door-to-door automobile upkeep services on Bopai’s website, such as vehicle cleaning, wheel alignment, and air filter evaluation. And the cost might go as low as half of the average charged by conventional garages.
Data of the firm’s financial circumstance is not available, however Chinese media told that Bopai has suffered losses from burning cash for months.
Bopai got $17 million in Series A funding and $18 million in Series B, whose financiers are JD, China’s leading online retailer, as well as Innovation Works, an equity capital fund developed by ex-Google China primary Lee Kai-Fu.
Despite these powerful backers, Bopai showed its intent to retreat as early as October when it stopped services in 5 out of 22 towns in China. In December, its major office in Beijing closed.
Bopai is now similar to its former rivals– E Car Wash, Easy Car Wash, and Kungfu Car Wash which all turned off in October, and Car8, Woixi, Cloud Car Wash, and Dida Car Wash which likewise closed in 2015.
Zhang Jing, previous CEO of E Car Wash, among the O2O vehicle wash business that went bust in 2015, approximated that operating a door-to-door car service is actually less rewarding than running a garage, since it costs excessive to drive to clients’ locations, and orders do not come as routinely as standard stores. Price-sensitive consumers don’t adhere to one O2O provider; they simply select the most inexpensive one.
Bopai’s over 1,400 specialists will be employed by Pang Da Vehicle, a vehicle dealer in China, who will return to conventional garages owned by the firm, but they can also do door-to-door service if needed.
