In a recently developed market like China where everything is new, car services veteran Autohome Inc. (ATHM.US; 2518.HK) is playing the contrarian with a big new bet on used car trading. Such a bet may have once raised eyebrows, in a land where new homes, new cars and new gadgets were in strong demand for years from a growing middle class happy to spend its newfound wealth on the latest and greatest items.
But as China’s economy slows after three decades of breakneck growth, many are considering the once unthinkable option of buying used items like cars, smartphones and existing homes rather than new ones. To accommodate that shifting demand, specialists like Autohome are springing up to act as middlemen for such trading, providing a professional level of reassurance for buyers who may be wary of ending up with duds.
Autohome is one of China’s oldest car services companies, and shot to fame 10 years ago with its listing on the New York Stock Exchange. Its shares once traded as much as nearly seven times their IPO price as China zoomed past the U.S. to become the world’s largest auto market. Despite the market slowing in the last three years, they’re still more than 60% ahead of their IPO price.