Core Insights - The automotive aftermarket in China is experiencing significant changes due to the increasing penetration of new energy vehicles (NEVs), with a retail penetration rate of 55.2% in August, up 1.5 percentage points year-on-year, marking a new high for the year [1] - The total scale of China's automotive aftermarket is projected to reach 1.9 trillion yuan by 2025, with an average compound annual growth rate of 5% from 2022 to 2025 [2] - The market for NEV aftermarket services is expected to grow rapidly, with the maintenance and repair service sector projected to reach 229.3 billion yuan in 2024, reflecting a year-on-year growth of 25.1% [3] Industry Trends - The number of NEVs in China has surpassed 36 million and continues to grow, indicating a forthcoming explosion in the NEV aftermarket [1] - The average age of passenger vehicles in China has reached 6.8 years, with a high willingness among owners of vehicles aged 4-9 years to enter the independent aftermarket [3] - The user base for NEV transactions on platforms like Tuhu has grown significantly, with a reported 340 million users in the previous year, representing an 83.5% increase [3] Challenges in the Market - The automotive maintenance and repair industry faces challenges such as insufficient price transparency, additional charges, and a need for improved digital service experiences [4] - There is a significant talent gap in the industry, particularly regarding the professional skills required for NEV after-sales services [4] - The industry is experiencing issues with service quality, including unclear service project communication and price transparency, which negatively impacts consumer trust [4] Company Strategies - Tuhu is focusing on digitalization and standardization to address industry challenges and is replicating its successful operational model from the fuel vehicle market to the NEV sector [4][5] - Tuhu has established a closed-loop service model for NEVs, covering detection, repair, and ancillary services, and has partnered with 16 battery manufacturers for warranty and out-of-warranty repairs [5] - Tuhu's franchise model offers a net profit-sharing approach, reducing financial pressure on new stores during their initial operating period [5]