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JOURNEY · DETAIL
Tuhu Car's Chen Min: Starting with Tires, Dominating the Trillion-Yuan Automotive Aftermarket with Standardized Workshop Stores
Founded: Chen Min, Hu Xiaodong · Shanghai Lantu Information Technology Co., Ltd. (Tuhu Car)
JOURNEY
Key Fields
FIELD STAMPSIndustryLocal Services
RegionChina
ScaleGiant
ChannelOther
Origin
In 2011, Chen Min and Hu Xiaodong started the business in Shanghai with 300,000 RMB in seed funding. At the time, China's automotive aftermarket was highly fragmented, plagued by counterfeit goods at roadside shops and opaque pricing. Tires were chosen as the entry point because they were highly standardized and easy to compare online. The founders' strategy: use e-commerce to sell authentic tires at transparent prices to build initial trust, then expand into maintenance and repair. During the early days, Chen Min would personally deliver tires to customers in the middle of the night to fulfill same-day delivery promises.
Milestones
2011
Startup PMF
In 2011, Chen Min (born 1981, formerly of HP and Baixing.com) and Hu Xiaodong founded Tuhu Car in Shanghai. They focused solely on online tire sales, emphasizing authentic products and transparent pricing. In the first year, they validated that car owners were willing to pay for low-priced, authentic tires online, successfully avoiding the comprehensive automotive e-commerce model that was failing at the time.
2013
Expansion Obstacles Turning Point
Pure e-commerce tire sales hit a dead end: customers had nowhere to install the tires, and offline shop owners were hostile to e-commerce, leading to poor service and high return rates. Chen Min realized that an online-only approach was a dead end and decided to build an offline installation network by signing agreements with local shops. This was the critical pivot from a transaction platform to an O2O model, spanning 2013 to 2014.
2016
Model Restructuring Pivot
In 2016, the lack of quality control in partner shops forced Tuhu to launch its own 'Workshop Store' system: unified signage, pricing, service processes, and parts supplied directly by Tuhu. After validating the single-store model, they opened it to franchising, replacing loose partnerships with strict management. This solved the biggest non-standardization problem in the aftermarket and became Tuhu's core competitive barrier against JD and Tmall.
2018
Cash-Burning Expansion Failure
During rapid store expansion, the company suffered massive losses. From 2019 to 2022, cumulative net losses exceeded 10 billion RMB (including fair value changes of convertible redeemable preferred shares), leading to market skepticism about the 'more stores, more losses' model. During the pandemic, foot traffic plummeted, cash flow was strained, and the planned US IPO was shelved due to the deteriorating environment for Chinese stocks. This was the most dangerous period since the company's inception, lasting from 2018 to 2020.
2022
Cost Cutting for Survival Turning Point
In 2022, Tuhu closed some inefficient self-operated stores and shifted to a light-asset expansion model focused on franchised workshop stores. They also strengthened direct procurement for tires and maintenance, and deepened partnerships with brands like Cooper. That year, they had approximately 16.5 million transacting users with a repurchase rate of over 60%, significantly narrowing losses and paving the way for an IPO.
2023
IPO PMF
In 2023, Tuhu Car listed on the Hong Kong Stock Exchange, becoming the first automotive aftermarket stock in Hong Kong with a market cap of approximately 24 billion HKD. Early investors included Tencent, Sequoia, and Hillhouse. By 2022, revenue reached approximately 11.5 billion RMB, with nearly 100 million registered users and over 4,600 workshop stores. It took 12 years to grow from 300,000 RMB in seed funding to a 20 billion-level market cap.
2024
Scale Profitability Growth
Post-IPO, Tuhu accelerated its penetration. By early 2026, it reached 7,205 workshop stores and over 150 million registered users, achieving full-year scale profitability for the first time. It became a primary launch channel for new tire products, using supply chain bargaining power to boost franchisee margins. However, under the low-price siege of JD Auto and Tmall Auto, single-store profitability and user trust remain the focus of ongoing competition, a phase spanning 2024 to 2026.
Turning Points
- 2014: Abandoned pure online sales to build an offline installation network, pivoting from a retail e-commerce site to an O2O service platform.
- 2016: Launched the strictly managed 'Workshop Store' system, using standardized stores to solve the non-standardization issues of the automotive aftermarket.
- 2022: Shifted from heavy-asset self-operation to light-asset franchise expansion and strengthened direct supply chain procurement, significantly narrowing losses.
- 2023: After the US IPO was blocked, successfully pivoted to a Hong Kong IPO, becoming the first listed company in the automotive aftermarket.
Failures & Pitfalls
- Early pure e-commerce tire sales failed to solve the installation issue, leading to uncontrollable return rates and negative reviews, nearly killing the business model.
- The loose partnership phase with roadside shops resulted in a total loss of service quality control; counterfeit goods and complaints damaged brand trust, forcing a restart with self-operated stores.
- The 2019-2022 rapid expansion period saw massive cumulative losses and a failed US IPO, putting extreme pressure on the cash flow.
- Sacrificing self-operated profits for store count led to long-term skepticism from the capital market regarding the single-store profitability model.
关键成功要素
- Focused on tires—the most standardized and price-comparable category—to establish a trust anchor for authentic, low-priced products.
- Combined App-based transparent pricing with standardized workshop store execution to turn the non-standard automotive aftermarket into a replicable retail model.
- Leveraged direct supply chain procurement and brand authorizations to trade scale for bargaining power and product authenticity.
- Strictly managed franchise model: headquarters handles supply, pricing, and systems, while stores focus on service fees, ensuring expansion speed and service consistency.
- Secured multiple rounds of funding from giants like Tencent to survive the loss-making period, followed by a decisive shift to a light-asset franchise model in 2022 to secure the IPO.
Lessons
- In low-frequency, high-ticket service industries, neither online-only nor offline-only models are sustainable; a closed-loop service fulfillment is the true barrier to entry.
- If the relationship between a platform and offline stores is merely traffic-based, service quality will inevitably fail; one must control the goods, prices, and personnel.
- Losses during expansion are not scary; what is scary is burning cash before the single-store model is proven—a trap Tuhu nearly fell into.
- Building a supply chain and store network as a moat before industry giants enter is the only path to survival for a small startup.
- The phase where the founder personally delivered tires was essentially compensating for the lack of established service standards.
Core Data
- 2023 HK IPO Market Cap：Approx. 24 billion HKD (based on public data, not independently verified)
- 2022 Revenue：Approx. 11.5 billion RMB (based on public data, not independently verified)
- 2026 Workshop Store Count：7,205 (based on public data, not independently verified)
- Registered Users：Over 150 million (based on public data, not independently verified)
- 2022 Transacting Users：Approx. 16.5 million (based on public data, not independently verified)
- Repurchase Rate：Over 60% (based on public data, not independently verified)
- Seed Funding：300,000 RMB (based on public data, not independently verified)
Competitors / Peers
Tuhu's direct competitors are the two giants: JD Auto and Tmall Auto. JD Auto leverages JD Retail's traffic and procurement system to replicate Tuhu's path with low-priced tires and store franchising. Tmall Auto relies on Alibaba's traffic and the New Carzone supply chain to capture franchisees in lower-tier markets. Traditional 4S dealerships lose customers to independent aftermarket providers once warranties expire, while roadside family-owned shops rely on low prices and repeat local customers. Tuhu's differentiation lies in its standardized workshop store network, the scale of its direct tire supply chain, and its digital membership system with over 150 million users. However, the biggest risk remains pressure on single-store profitability if the subsidy war from these giants intensifies.