Industry Report of The Automotive Aftermarket in China: September 2023

Industry Report of the Automotive Aftermarket in China
September 2023
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CIC introduction, methodologies and assumptions
China Insights Consultancy (“CIC”) is commissioned to conduct research and analysis of, and to produce a report on
the automotive aftermarket in China. The report commissioned has been prepared by China Insights Consultancy
independent of the influence of the Company and other interested parties.
CIC is an independent market research and consulting company that provides industry consulting services, commercial
due diligence, and strategic consulting services to both institutional investors and corporations. We have agreed to pay
a commission fee of approximately RMB1,450,000 for the CIC Report. CIC undertook both primary and secondary
research using a variety of resources. Primary research involved interviewing key industry experts and leading industry
participants. Secondary research involved analyzing data from various publicly available data sources, including the
National Bureau of Statistics of China, Chinese Government releases, annual reports published by relevant industry
participants, industry associations, CIC’s own internal database and other relevant sources.
CIC’s projection on the size of each of the related markets in China takes into consideration various factors, including (i)
that the overall global social, economic, and political environment is expected to maintain a stable trend over the next
decade; (ii) that related key industry drivers are likely to continue driving growth in automotive service market during the
forecast period, including the continuously climbing car parc, gradually aging vehicles, and consumption behavior
difference with the U.S. market; and, (iii) that there is no extreme force majeure or industry regulations by which the
market situation may be affected either dramatically or fundamentally.
All statistics are reliable and are based on information available as of the date of this report. Other sources of
information, including government, industry associations or market participants, have provided some of the information
on which the analysis or data is based. CIC believes that the assumptions used in preparing the CIC Report, including
those used to make future projections, are factual, correct, and not misleading.
All the information about the Company is obtained from the Company’s management interview and independent third-
party sources. The information of the Company has not been independently verified by CIC.
1
Terms and Abbreviations
Terms:
Auto warranty: Auto warranty is a warranty that is provided by vehicle's manufacturer when the car is purchased, which covers the car for a certain
number of miles or years.
Automotive aftermarket: Automotive aftermarket refers to all the services around the use of a car after the car is sold.
Automotive services: Automotive services are consumers’ rigid demand during a vehicle’s life cycle, including auto repair and maintenance, car wash
and auto detailing, auto accessories.
Compound Annual Growth Rate (CAGR): Compound annual growth rate (CAGR) refers to the year-over-year growth rate which is calculated by
taking the nth root of the total percentage growth rate over a specified period of time. The formula for calculating CAGR is: (Ending Value/Beginning
Value)^(1/number of years)-1
Car make: A car make refers to a brand of vehicle.
Car parc: Car parc refers to the total number of registered vehicles within a given geographic region.
Authorized dealership/4S: a business that sells new or used cars at the retail level, based on a dealership contract with an automaker or its
sales subsidiary.
Franchise: A franchise is a type of license that grants a franchisee access to a franchisor's proprietary business knowledge, processes and
trademarks, thus allowing the franchisee to sell a product or service under the franchisor's business name.
Mileage: Total miles covered or traveled during a given time.
OEM: Short for Original Equipment Manufacturer; in the automotive industry, it refers to automotive manufacturer.
Passenger vehicle: Passenger vehicle refers to motor vehicle used for carrying passengers.
Abbreviations: GMV: Gross Merchandise Volume 成交总金额

4S: Sales, Spare part, Service, Survey 整车销售、零配件、售后服务、信息 PHEV: Plug-in Hybrid Electric Vehicle 混合动力电动车
反馈 IAM: Independent After Market 独立售后服务市场
ACEA: Association des Constructeurs Européens d‘Automobiles 欧洲汽车 ICE: Internal Combustion Engine 内燃机
协会 IMF: International Monetary Fund 国际货币基金组织
BEV: Battery Electric Vehicle 纯电车 MSRP: Manufacturer Suggested Retail Price 厂商建议零售价
BTS: Bureau of Transportation Statistics 美国运输统计局 NBS: National Bureau of Statistics of China 中国国家统计局
CADA: China Automobile Dealers Association 中国汽车流通协会 NEV: New Energy Vehicle 新能源汽车
CAGR: Compound Annual Growth Rate 复合年均增长率 O&O: Online and Offline 线上与线下
CPCA: China Passenger Car Association 中国乘用车市场信息联席会 OEM: Original Equipment Manufacturer 汽车主机厂
DIFM: Do-It-For-Me R&D: Research and Development 研究与开发
DIY: Do-It-Yourself SKU: Standard Keeping Unit 库存单位
EU: European Union 欧盟 UN: United Nations 联合国
GDP: Gross Domestic Product 国内生产总值 U.S. (the U.S.): the United States 美国 2
Table of Contents
1 Overview of the automobile market in China
2 Analysis of the automotive service market in China
Emergence of the integrated online and offline platform of automotive

3
service market in China
4 Competitive analysis of the automotive service market in China
3
1. Overview of the Automobile Market in China
Total Parc and Ownership Penetration of Passenger Vehicles
- As of Dec.31 2022, China had 273.6 million passenger vehicles registered and was the largest
country in terms of total parc of passenger vehicles; passenger vehicle car parc in China sat at 194
per thousand people in 2022, which is significantly lower than developed countries
Passenger vehicle ownership penetration, major countries,

Car parc of passenger vehicle, China, 2018-2027E 2018-2027E
Million CAGR
100 U.S. Germany China
2018-2022 2022-2027E 2023E-2027E
7.4% 6.4% 6.3% Canada Japan 76.5% 76.9% 76.9%
400 Car parc of passenger vehicle 80
373.8 63.2% 63.6% 62.5%
353.4
333.2 60 58.3% 58.5% 59.6%
312.9 49.4% 49.9% 51.2%
300 293.0 40
273.6 26.3%
260.4 18.4% 19.4%
241.6 20
224.7
205.6 0
200 2018 2019 2020 2021 2022 2027E
Million
Parc of passenger vehicle
100 273.6 256.3
62.4 48.7 24.6
China U.S. Japan Germany Canada
0
2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E
• The car parc of passenger vehicles in China increased significantly between 2018 and 2022, rising from 205.6 million to 273.6 million, mainly attributable to rising
personal income levels and an overall consumption upgrade. As of Dec.31 2022, China had 273.6 million passenger vehicles registered and has become largest
country in terms of total parc of passenger vehicles. Although China has experienced a rapid growth of car parc, private ownership of passenger vehicles became
prevalent in the past 10 years. As of Dec.31 2022, passenger vehicle car parc per thousand people in China sat at 194, which is significantly lower than developed
countries such as the U.S. (769 per thousand people) and EU (563 per thousand people). Given the positive outlook for sales of passenger vehicles between 2022
and 2027, total passenger vehicle parc is estimated to reach approximately 373.8 million by 2027, representing a CAGR of 6.4%. And passenger vehicle car parc
per thousand people in China is projected to rise to 263 in 2027.
*Notes: Passenger car parc in the US refers to the registered number of light duty vehicles with short/long wheel base, including
passenger cars, light trucks, vans, pickup trucks, and sport utility vehicles.
5
Source: ACEA, CPCA, CADA, Public Security Bureau, BTS, Statistics Canada, Japan Automotive Manufacturers Association, IMF, NBS, China Insights Consultancy 5
Total Parc of Passenger Vehicle in China
- The total parc of passenger vehicle over 5 years has grown to 156.9 million in 2022, and is expected
to increase to 229.3 million in 2027; as the average age of passenger vehicle in China getting older,
the parc of passenger vehicle with warranty expired has been increasing
Total parc of passenger vehicle, by vehicle age, China, 2018-2027E Key analysis
Million CAGR • The total parc of passenger vehicle in China
2018-2022 2022-2027E reached 273.6 million in 2022, with a CAGR
-2.7% 6.2% of 7.4% growing from 205.6 million in 2018.
1-3 year(s)
0.3% 1.8%
The parc is expected to reach 373.8 million
4-5 years in 2027, representing a CAGR of 6.4%
Over 5 years 17.7% 7.9%
400 373.8 between 2022 and 2027.
7.4% 6.4% 353.4
Total 312.9
333.2 • Specifically, the total parc of passenger
293.0 90.1
300 273.6 85.6 vehicle over 5 years has grown from 81.8
260.4 81.1
241.6 71.6 76.6
224.7 66.8 50.1 54.5 million in 2018 to 156.9 million in 2022,
205.6 64.9 47.1
200 67.3 45.4
71.9 49.9 46.1 representing a CAGR of 17.7%, and is
74.5 53.3
51.5
53.7 expected to keep growing to 229.3 million in
100 49.3 205.0 217.7 229.3
142.1 156.9 175.3 191.0 2027.
101.3 120.7
81.8 • Warranty is one of the key factors for a car
0
2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E owner to decide whether to go to authorized
dealerships or IAM stores. The warranty
period from OEMs typically covers three
Total parc of passenger vehicle, by warranty status, China, 2018-2027E
years after the sales of new passenger
Million CAGR vehicles, after which, car owners will be
2018-2022 2022-2027E
more likely to choose IAMs for more
convenient location choices and affordable
Under warranty -2.9% 2.2%
services.
Off warranty 12.6% 7.7%
400 373.8 • As the average age of passenger vehicle in
Total 7.4% 6.4% 353.4 China getting older, the parc of passenger
333.2
312.9 78.3
300 273.6
293.0
73.7
77.8 vehicle off warranty has been increasing
260.4 73.4
224.7
241.6 68.7 between 2018 and 2022, with the off-
205.6 70.1
72.7
70.5 warranty increasing from 126.7 million to
200 76.8
78.9 203.6million.
275.6 295.6
259.5
100 189.9 203.6 224.3 239.5 • Passenger cars with expired warranties in
147.9 169.0
126.7 China accounted for 73.6% of the total car
0
parc as of the end of 2022, and the figure is
2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E expected to reach 79.1% by the end of 2027.
Source: CPCA, CADA, Public Security Bureau, China Insights Consultancy 6
Breakdown of Car Parc by City Tier in China
- The majority of passenger cars in China is located in tier-2 and below cities. With 273.6 million total
car parc as of the end of 2022, tier-2 and below cities account for 75.5% of total passenger cars in
China, representing huge market potential for automotive service market.
Market opportunities for automotive aftermarket in tier 2 and below cities in China
Macro indicators Driver Rapid growth of car parc in tier 2 and below cities
• With increasing level of disposable income, consumption upgrade, and extension of highway network,
there is increasing demand for standardized and quality automotive service in lower tier cities.
• The majority of passenger cars in China is located in tier-2 and below cities. With 273.6 million total
car parc as of the end of 2022, tier-2 and below cities account for 75.5% of total passenger cars in
China, representing huge market potential for automotive service market. Moreover, despite of the
larger base, China’s tier 2 and below cities has witnessed rapid growth of car ownership from 2018 to
Population Increasing 2022, with its CAGRs of passenger car parc and passenger car per capita higher than those of tier 1
disposable cities.
The population in tier 2 and income Passenger car parc, breakdown by city tier, China, 2018-2027E
below cities and counties
Million units
accounted for more than
205.6 273.6 373.8 CAGR(2018-2022)
80% of the total 300 282.2
Tier 1 cities 6.0%
population in China in 2022. 250
206.5 New tier 1 cities 9.8%
200
157.6 Tier 2 and below cities 7.0%
Consumption 72.2 Total car parc
50.6 7.4%
upgrading 50 13.1
34.8
16.5 19.4
0
2018 2022 2027E
Passenger car per capita, China, 2018-2022
GDP Vehicles per1,000 people

CAGR(2018-2022)
The GDP in tier 3 and 300 279
below cities accounted for 250 217 Tier 1 cities 5.3%
Extending 204
200 176 179 New tier 1 cities 8.2%
more than 50% of the highway
150 136
network Tier 2 and below cities 7.1%
total GDP in China in 2022. 100
50
0
2018 2022
Source: CPCA, CPDA, NBS, China Insights Consultancy 7

Average Vehicle Age of Passenger Vehicle in China and the U.S.
- The average vehicle age of passenger vehicles in the U.S. and EU, reached 12.2 and 12.3 years
respectively in 2022, while the average vehicle age of passenger vehicles in China was 6.2 years,
which is projected to reach 8.0 years by 2027.
Average vehicle age of passenger vehicle, China and the U.S., 2018-2027E
Years CAGR
2018-2022 2022-2027E 2023E-2027E
China 6.2% 5.1% 5.0%
20 EU member countries 2.5% 0.6% 0.6%
U.S. 1.1% 0.5% 0.5%

15
12.0 12.1 12.3 12.2 12.6 12.5
11.1 11.7 11.5 11.8 11.8 11.9
10 8.0
5.6 6.0 6.2
4.9 5.3
5
0
2018 2019 2020 2021 2022 2027E
• Developed countries such as the U.S. and EU member countries have longer history of the automobile industry dated back to the 1890s, which has
cultivated strong automotive culture. Along with their prosperous economics and high disposable income per capita, the car parc in the U.S. and EU
member countries had developed rapidly since early the 1960s, and entered a stable growth stage in last decade. In the U.S., for example, the passenger
car parc increased to 256.3 million in 2022, from 230 million in 2010. For China, the development of its automobile industry started from 1950s, which fell
behind that in the developed countries. Moreover, restricted by the disposable income per capita, passenger vehicles, especially private vehicles, were not
prevalent until the 2010s in China. The passenger car parc in China rocketed from 61.2 million in 2010 to 273.6 million in 2022, which was mainly attributed
to the new car sales during the last 5 years. As such, the current passenger car parc in China, is featured with a younger vehicle age structure, further
contributing to the lower average vehicle age.
• The average age of passenger vehicles in the U.S./EU is significantly higher than that of the passenger vehicles in China. The average vehicle age of
passenger in the U.S. and EU, reached 12.2 and 12.3 years respectively in 2022, while the average vehicle age of passenger vehicles in China was 6.2
years.
• With the steady growth of the total parc of passenger vehicles in China, the age structure of passenger vehicles has been gradually aging, with the average
vehicle age increasing from 4.9 years in 2018 to 6.2 years in 2022. And by 2027, the average age is projected to reach 8.0 years, at a CAGR of 5.1% from
2022 to 2027, primarily due to natural ageing of car parc and extended service life with reduced scrapping.
• Ageing car parc generally leads to more frequent maintenance and repair needs, as well as car owners’ preference for value-for-money products and
services. Meanwhile, ageing car parc contributed to the increasing proportion of passenger vehicles that are out of warranty.
Source: ACEA, CPCA, CADA, Public Security Bureau, BTS, China Insights Consultancy 8
Mileage of Passenger Vehicle in China and the U.S.
- With the growth of passenger vehicle parc and increasing frequencies of travelling by passenger
vehicle in China, the total mileage driven per year of passenger vehicle in China is expected to rise to
2.7 trillion miles by 2027
Total mileage driven per year of passenger vehicle, China and the U.S., 2018-2027E
Trillion miles CAGR
2018-2022 2022-2027E • The population density is relatively
4.0 China 6.4% 8.4% lower in the U.S. compared to that of
U.S. -0.7% 0.6% China, thus many people in the U.S.
3.5
mainly use private cars rather than
2.9 2.9
public transportation. Passenger
3.0 2.8
2.7 vehicles are still the main means of
2.5 transportation for households in the
+52.9% U.S.. For China, there are more
2.0 1.8 developed railway passenger
transport facilities. Therefore, the
1.5 1.4 average miles driven per year of
passenger vehicle in China has been
1.0 much lower than that of the U.S.. In
2022, the average miles driven per
0.5 year per vehicle of passenger vehicle
in China is approximately 6,579 miles,
0.0
2018 2022 2027E compared to 10,976 miles in the U.S..
• With the growth of passenger vehicle
Miles parc and increasing frequencies of
Mileage driven per passenger vehicle travelling by passenger vehicle in
10,976.3
China, the total mileage driven per
year of passenger vehicle in China is
6,578.9
expected to rise to 2.7 trillion miles
by 2027, registering a CAGR of 6.4%
from 2022 to 2027.
U.S. China
Source: CPCA, CADA, Public Security Bureau, BTS, China Insights Consultancy 9
Sales Volume and Total Parc of NEV Passenger Vehicle in China
- With favorable policies rolled out by Chinese government, the sales volume of NEV passenger
vehicle grew at a CAGR of 58.3% between 2018 and 2022, contributing to the growth of the total parc
of NEV passenger vehicle in China
Sales volume of NEV passenger vehicle, China, 2018-2027E Key analysis

Million CAGR
• With favorable policies rolled out by
2018-2022 2022-2027E
25 Chinese government, the sales
Sales volume of NEV passenger vehicle 58.3% 27.6% 22.1
volume of NEV passenger vehicle
20 18.4 grew at a CAGR of 58.3% between
15.1 2018 and 2022 and reached 6.5
15 12.0
9.1 million in 2022. NEV sales volume
10 is expected to reach 22.1 million in
6.5
5 3.3 2027, representing a CAGR of
1.0 1.1 1.2 27.6% between 2022 and 2027.
0 The penetration rate of NEV
2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E
passenger vehicle, in terms of
NEV as % of
total sales 4.3% 5.0% 5.8% 15.2% 27.2% 35.7% 44.3% 52.9% 61.4% 70.0% sales volume is expected to
volume increase to 70.0% in 2027, from
27.2% in 2022.
Total parc of NEV passenger vehicle, China, 2018-2027E
• The parc of NEV passenger vehicle
Million CAGR grew at a CAGR of 48.2% between
76.6 2018 and 2022 and increased from
80 2018-2022 2022-2027E
2.3 million to 12.6 million during this
70 Car parc of NEV passenger vehicle 48.2% 43.5%
59.4 period. The parc is expected to
60
reach 76.6 million in 2027,
50 44.5
representing a CAGR of 43.5%
40 31.9 between 2022 and 2027.
30 21.4
20 12.6 • The penetration rate of NEV
10 4.5 7.4 passenger vehicle in terms of total
2.3 3.4
0 parc reached 4.6% in 2022. And by
2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E 2027, the NEV penetration rate is
NEV as % of expected to reach 20.5%.
1.1% 1.5% 1.9% 2.8% 4.6% 7.3% 10.2% 13.4% 16.8% 20.5%
total parc
Source: CPCA, CADA, Public Security Bureau, China Insights Consultancy 10

2. Analysis of the Automotive Service Market in China
- Overview of automotive aftermarket and automotive service market
- Analysis of auto maintenance and repair market
- Analysis of car wash and auto detailing market
- Analysis of auto accessories market
Definition and Categorization of Automotive Service
- Automotive service is a pivotal part of consumer’s demand throughout a vehicle’s life cycle, which
includes auto repair and maintenance, car wash and detailing, and installation-required auto
accessories.
Definition and categorization of automotive services
Automotive service is a pivotal part of consumer’s demand throughout a vehicle’s life cycle, which includes auto repair and
maintenance, car wash and detailing, and installation-required auto accessories. The automotive service market in China
includes services provided to all passenger vehicles in operation, and the total market demand of automotive services is
directly related to factors such as total passenger car parc and average vehicle age, etc.
Service categorization Definition and examples
Refers to the process of using technical methods to restore the normal function of vehicles or to prolong
the useful life of vehicles:
• Regular maintenance includes air and fuel filters replacement, motor oil and coolant replacement
and headlights replacement, etc.
Auto repair and
• Major maintenance includes spark plug replacement, timing belt and accessory belt maintenance,
maintenance service
and transmission repair etc.
• Maintenance for tire and chassis parts such as brake pad and shocker absorbers and wheel
alignment, etc.
• Dent repair and painting services
Refers to systematically performing operations to keep the vehicle in better conditions, mainly cosmetic,
but with no mechanical effect, primarily including:
Car wash and detailing • Exterior cleaning and detailing services include car wash, waxing and polishing, etc.
service • Interior cleaning and detailing services include undercarriage wash and interior waxing, air
conditioning unit cleansing, etc.
• Exterior modification services include paint protection films and spray paint, performance trim.
Refer to auto interior accessories that require installation service, which include, amongst others,
Installation-required
windshield wiper replacement car ornament and in-vehicle electronic product such as car DVR (Digital
accessories
Video Recorder), GPS navigator and auto audio.
Source: China Insights Consultancy 12

Value Chain of the Automotive Service Market in China
- The value chain of automotive service in China consists of two channels, the authorized dealership
channel and the independent aftermarket service provider channel, or the IAM channel.
Value chain of automotive service industry in China
Auto parts
Auto parts distributors Automotive parts/service providers
manufacturer
Authorised dealership channel
Aftersales department of OEMs Authorised dealerships
IAM channel
Jobbers
Auto parts and
Car
accessories
Owners
manufacturers E-commerce
platforms
Standalone stores
Distributors
Chain stores
Flow of products DIY (Do-It-Yourself) business DIFM (Do-It-For-Me) business

Comparison of Automotive Service Market in the U.S. and China (1/3)
- Compared to China, the automotive service market in U.S served a larger and older car parc with
higher rate of chained IAMs, resulting in higher per store revenue and operation efficiency
• With increasing volume of passenger car parc, aging fleets as well as climbing vehicle miles, U.S has developed a matured
automotive service market. Compared to China, the U.S has more passenger cars, older passenger car population, and longer
distance driven per year. As a mature market, automotive service market in U.S generated more revenue and operated at higher
efficiency than that in China, since it has less auto service providers and higher percentage of chain service providers.
Comparison of passenger car usage between U.S and China
China U.S
Passenger car parc1, 2022 Average age of passenger car, 2022 Average distance driven, 2022
Million units Year mile per year
273.6 12.2 10,976.3
0.94x 2.0x 1.7x
256.3 6.2 6,578.9
Times Times Times
Comparison of automotive service market between U.S and China
Market size of automotive service and Number of automotive service stores, Percentage of chain service stores in
average annual expenditure per car, 2022 U.S and China, 2022 automotive service market , 2022
Billion USD 345.8 Thousand %
178.0 895.9
4.8%
33.6
China U.S U.S 46.6%

862.3 53.4% China
USD
1,349.1 213.6
16.9 95.2%
650.6 196.7
China U.S
China U.S 4S/dealership stores IAMs
Notes: Chain IAMs Independent IAMs
1 In U.S, data for light vehicle (including both short and long wheel base of passenger car, pickup trucks and vans) is used for calculation of passenger car parc.
Source: BTS, CPCA, CADA, China Insights Consultancy 14
- The automotive service stores in the U.S and EU member countries operated at higher efficiency with
average parc of passenger car served reaching 1,200 and 727 per service store, respectively, whereas
in China average parc of passenger car served records only 305 per service store.
Comparison of the supply in automotive service market in the U.S. and China，as of Dec 31 2022
Passenger car parc Number of service stores Average parc of passenger Chain rate
Million units Thousand units car served per store
256.3 ~214 ~1200 43.4%

The U.S.
252.1 ~347 ~727 /

EU*
273.6 ~896 ~305 7.8%

China
• The automotive service stores in the U.S and EU member countries operated at higher efficiency with average parc of passenger
car served reaching 1,200 and 727 per service store, respectively.
• Compared to the U.S. and EU member countries, there is still large room for improvement in store efficiency. Due to over supply,
average parc of passenger car served in service store records only 305 per store in China’s automotive service market.
• On average, an automotive service store in China only served 336 passenger cars in 2021, much lower than its counterparts in the
United States and in EU member countries which served 1,205 and 726 passenger cars on average in 2021, respectively.
Note: Chain stores refer to the stores under the same brand/group who
operates over 5 stores at the same time.
EU refers to 27 EU member countries Source: ACEA, Public Security Bureau, BTS, China Insights Consultancy 15
- The maintenance and repair service stores in the U.S operate at higher efficiency with average parc
of passenger car served reaching approximately 1,810 per store, whereas average parc of passenger
car served records only 553 per store.
Comparison of the supply in maintenance and repair service market in the U.S. and China
Passenger car parc Number of IAM* stores in Average parc of passenger

Million units maintenance and repair segment car served per store
Thousand units
The U.S. 256.3 ~142 ~1,810
+227.0%
China 273.6 ~495 553
Note: IAM stores in the U.S. include auto parts stores, auto maintenance and repair stores, and car body shop stores.
• The automotive service stores in the U.S. operate at higher efficiency with average parc of passenger car served in
IAM store reaching approximately 1,810 per store.
• Compared to the U.S., there is still large room for improvement in store efficiency. Due to over supply, average parc
of passenger car served in IAM store records only 553 per store in China’s automotive service market.
Source: Public Security Bureau, BTS, China Insights Consultancy 16

Comparison of Automotive Service Market in EU and China
- Compared to China, EU member countries have a larger fleet size of passenger cars with higher
average vehicle age, which further contributes to more average expenditure on automotive service
per car per year for car owners.
Comparison of passenger car usage between EU member countries and China
China EU member countries
Average expense on auto service per

Passenger car parc, 2022 Average age of passenger car, 2022
car, 2022
Million units Year USD
273.6 12.3 875.1
0.9x 2.0x 1.3x
252.1 6.2 650.6
Times Times Times
Comparison of automotive service market between EU member countries and China
Market size of automotive service market, EU Number of automotive service stores,

member countries and China, 2022 EU member countries and China, 2022
USD billion Thousand 4S/dealership stores IAM stores
213.8 895.9
178.0
33.6
347.0
862.3
36.2
310.9
China EU China EU
• EU member countries have developed a more mature automotive service market. Compared to China, EU member countries have a
larger fleet size of passenger cars with higher average vehicle age, which further contributes to more average expenditure on
automotive service per car per year. As a mature market, automotive service market in EU member countries generated more
revenue and operated at higher efficiency than that in China, since it has less auto service providers.
Source: ACEA, China Insights Consultancy 17

Supply Analysis of Automotive Aftermarket in China
- Authorized dealerships are characterized by higher level of service and premium prices, whilst traditional IAMs
provide more convenience services at lower prices. Although traditional IAMs offer a more convenient option for
cost-conscious car owners, they often lack the ability to scale, and have difficulty in fostering strong customer loyalty
due to certain players' offering of counterfeit products and subpar service that taint the overall market.
Comparison between authorized dealership and traditional IAM
Service
Authorized dealerships Traditional IAM
provider
• Authorized dealerships are authorized by OEMs, hence • Automotive service providers who are independent of
they are allowed to fully utilize the supply chain of OEMs, OEM and provide various automotive service including
which provides original parts of good quality but limited auto repair and maintenance, car wash and detailing
Spare parts SKUs. services, and installation-required accessories, etc.
and services • Authorized dealerships cover comprehensive automotive • Provide automotive services to car owners of various
services including warranty claim and insurance claim. car brands and models, and tend to have more SKUs
• Single authorized dealership may specialize only in limited
vehicle brands of the OEM.
Service • Providing better service experience from well

quality • Relatively lower service standardization
trained and qualified technicians
Service • Heavier customer flow • Relatively low utilization ratio of workshop

efficiency • Standardized but longer process • Less standardized
• Premium prices for both material and hourly rate • Reasonable prices for material and hourly
• The price of the auto parts and service fee rate
Price charged by authorised dealerships is
approximately 30% and 80% higher, respectively,
compared to the parts and service fee charged by
IAM stores
• About 34 thousand outlets nationwide • About 862 thousand outlets in China
Network
• Lower store density and usually located in the • Higher store density covering both urban and
suburb areas; sparsely located in lower-tier cities suburban areas, widely spread nationwide
• Increasing centralization with M&A • Growing trend of franchising as brand
Trends • Slowing-down expansion speed awareness becoming more important to car
owners
• Significant growth in high-end and luxury • Small local IAMs suffer from certain players’
outlets offering of courterfeit asles and subpar service
Attractiveness to car owners from low to high: Source: China Insights Consultancy 18
Supply Analysis of Automotive Service Market in China
- The market size of automotive service market in terms of GMV reached RMB1,239.8 billion and is
expected to grow to RMB1,931.9 billion in 2027; IAM has been taking more share of the market with
its share increasing from 34.5% to 46.4% from 2018 to 2022, and is expected to rise to 58.1% in
2027.
Market size of automotive service market, in terms of GMV, by channel, China, 2018-
2027E Key analysis
RMB billion CAGR
2018-2022 2022-2027E 2023E-2027E • There are two major trends in the
Authorized dealership 4.7% 4.0% 3.7% automotive service market in China.
2,500 18.6% 14.3% 13.7% • Firstly, IAM is expected to take more
IAM
Total 10.1% 9.3% 9.0% 1,931.9 share of the market. The dependence of
2,000 1,790.3
1,648.2 car owners on authorized dealerships
1,505.0 weakens as more and more passenger
1,500 1,370.0 810.0
1,140.8 1,239.8 792.4 vehicles go off warranty. Meanwhile, IAM
1,026.8 765.3
944.3 732.3 is becoming a preferred channel for car
1,000 843.7 699.6
641.1 664.5
588.0 611.3 owners, as IAM outlets have been
500 552.6 997.9 1,121.9 improving service experience. The
772.7 882.9
499.7 575.3 670.3
291.1 356.3 415.5 market size of automotive service in
0 terms of GMV of IAM has increased from
2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E
IAM as % RMB291.1 billion in 2018 to
of total 34.5% 37.7% 40.5% 43.8% 46.4% 48.9% 51.3% 53.6% 55.7% 58.1% RMB575.3billion in 2022. The share of
GMV
IAM in the total market increased from
Number of outlets, by service provider, China, 2018-2027E 34.5% in 2018 to 46.4% in 2022. With this
trend going on, the GMV of IAM is
Thousands CAGR
expected to reach RMB1121.9billion,
2018-2022 2022-2027E
Authorized dealership 3.2% 1.1%
accounting for 58.1% of the total GMV.
IAM (Chain) 15.1% 24.2% • Secondly, to further improve the
IAM (standalone) 6.3% -1.1% efficiency of automotive service market,
6.5% 0.6% the trend of chaining and franchising is
1,000 Total 922.3
895.9 expected to be more intensive. As more
33.6 35.4 standalone IAM gradually being cleared
36.1 106.4
800 696.2 out or franchised, the number of
29.7 20.6 franchised IAM outlets is expected to soar
646.0 826.3 780.5
at a CAGR of 24.2% in the next 5 years
and reach 106.4 thousand.
0
2018 2022 2027E
Source: CPCA, CADA, China Insights Consultancy 19

Breakdown of Automotive Service Market by Channel in China
- DIFM business prevails in China’s automotive service market with the share of DIY business less
than 5% in the total market. As average vehicle age rises, the maintenance and repair of vehicle
requires more professional services, DIFM business is expected to further dominate the market.
Breakdown of automotive service market by channel, in terms of GMV, China, 2018-2027E

RMB billion CAGR
2,200 2018-2022 2022-2027E
2,000 DIY* 4.6% 5.2% 1,931.9
1,790.3 50.7
1,800 DIFM: IAM stores 20.0% 14.9%
1,648.2 47.8
1,600 DIFM: authorized dealerships 4.7% 4.0% 1,505.0 44.8
Total 10.1% 9.3% 1,370.0 43.2
1,400 1,239.8 41.4 1,071.2
1,140.8 39.4 950.1
1,200 838.1
1,026.8 38.0 729.5
1,000 944.3 35.5 628.9
843.7 34.7 535.9
32.9 461.7
800 321.5 380.0
258.1
600
400 699.6 732.3 765.3 792.4 810.0
552.6 588.0 611.3 641.1 664.5
200
0
2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E
100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
100.0% 3.9% 3.7% 3.5% 3.3% 3.2% 3.0% 2.9% 2.7% 2.7% 2.6%
80.0% 30.6% 34.1% 37.0% 40.5% 43.2% 45.9% 48.5% 50.9% 53.1% 55.4%
60.0%
40.0%
65.5% 62.3% 59.5% 56.2% 53.6% 51.1% 48.7% 46.4% 44.3% 41.9%
20.0%
0.0%
2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E
* DIY segment is included in IAM channel within this report. Source: China Insights Consultancy 20
Demand Analysis of Automotive Service Market in China
- Automotive service market is classified into three categories including repair and maintenance, car
wash and auto detailing, and installation-required accessories, among which repair and maintenance
service accounts for the largest proportion.
Market size of automotive service market, in terms of GMV, by service type, China, 2018-2027E Key analysis
RMB billion • In China’s automotive service
CAGR
market, repair and maintenance
2018-2022 2022-2027E 2023E-2027E
Installation-required accessories 2.7% service accounts for the largest
2.4% 2.4%
12.2% 11.4% 11.1%
proportion, contributing 68.2% in
Car wash and auto detailing
2,000 1,931.9
the total GMV of automotive
Repair and maintenance 10.7% 9.4% 9.1%
service market as of 2022. As
Total 10.1% 9.3% 9.0% 1,790.3 135.7
vehicle aging, the demand for
1,648.2 133.2 repair and maintenance is
expected to keep growing at a
1,505.0 130.1 468.9
1,500 CAGR of 9.4% by 2027.
126.8 425.7
1,370.0 • Car wash and auto detailing
1239.8 123.7 384.5 service accounted for 22.0% in the
1,140.8 120.8 345.1 total market as of 2022. With
1,026.8 119.4 308.0 Chinese car owners’ fast growing
1,000 944.3 114.4 273.4 needs for cosmetic services, the
843.7 110.4 247.1 GMV of auto detailing service is
108.6 219.0 expected to continue rising.
197.9
172.7 1,327.3 • The proportion of installation-
1,231.4 required accessories reached
1,133.6
500 1,033.0 9.7% in the automotive service
938.3
845.7
693.4
774.4 market in terms of GMV in 2022.
636.0 The demand for installation-
562.4
required accessories will continue
rising with the rebound of new car
0 sales and the increasing
2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E
replacement and modification
Note: Installation-required accessory refers to auto accessory that requires installation service,
demands.
amongst others including in-vehicle electronic product such as GPS navigator and auto audio.
Market Drivers of Automotive Aftermarket in China
-The key market drivers of automotive aftermarket in China are continuously climbing car parc,
Gradually aging vehicles and rising expenditure on automotive services, increasing vehicle use
frequency and total mileage travelled and more diversified demands for automotive service.
Market drivers Key Analysis

• With the continuous improvement of people’s purchasing power, China has achieved the highest new
vehicle sales globally for over 10 consecutive years since 2009 . With ever-increasing spending
power, China’s passenger car parc has reached 273.6 million in 2022, and is expected to reach 373.8
Continuously million in 2027 at a CAGR of 6.4%, with car parc per thousand people reaching 263. The increasing
climbing car parc car parc, especially in lower tier cities and rural areas where public transportation is less developed,
leads to increasing vehicle use frequency, as well as total mileage traveled and automotive wear and
tear.
• The average vehicle age in China has risen from 4.9 years in 2018 to 6.2 years in 2022. It is expected
that the average vehicle age in China will reach 8.0 years in 2027 with the development of the
automotive industry.
Gradually aging • With the increase of vehicle age, the frequency and demand of a vehicle for maintaining and repairing
vehicles and rising services will rise accordingly, leading to the increase in car owners’ expenditure on automotive
expenditure on services. Aging vehicles will lead to more demands for automotive services, and thereby the
automotive services expenditure per car on automotive services in China is expected to increase from RMB4,531.0 in 2022
to RMB5,167.6 in 2027, with a CAGR of 2.7%. Moreover, the annual expenditure per car on
automotive service from IAM in China is expected to increase from RMB2,102.3 in 2022 to
RMB3,001.0 in 2027, representing a CAGR of 7.4%.
• The vehicle use frequency and mileage travelled of Chinese consumers are increasing, and the
COVID-19 outbreak further stimulated the trend where public transportation is being replaced by
Increasing vehicle use private cars. The annual number of rides for private car is expected to increase at a CAGR of 6.9%
frequency and total from 2022 to 2027, while during the same period the number for public transportation is expected to
mileage travelled increase at a CAGR of 2.5%. The total mileage travelled of passenger car in China has reached 1.8
trillion miles in 2022, and is projected to grow to 2.7 trillion miles in 2027, at a CAGR of 8.4%.
• Given the rapid development of automotive service market in China, there will be increasing demands
for more personalized and customized needs, which will drive the growth of segments including
More diversified decorative products and auto detailing services. The average car owner group gets younger, the
demands for share of the young car owners (30 years of age or lower) grew from 20% in 2010 and exceed 40%
automotive service since 2020, thus car owners in China are increasingly tech savvy and prefer omni-channel
approaches to make purchases throughout their ownership journey. As such, more diversified DIFM
service is expected to play an increasing role in China's automotive service market. Expertise and
experience in the automotive repair and installation is also sought after.
Policy and Regulation of the Automotive Service Market in China
- There has been favorable policies rolled out by Chinese government to make the automotive service
market in China more transparent, more standardized and more liberalized.
More transparent More standardized More liberalized
C• 2015 Sept. Uniform Coding and Labeling of

Auto Parts 《汽车零部件的统一编码与标识》 G• 2018 Aug. Decision of the State Council to
D• 2017 Jan. Notice for the Comprehensive Cancel or Delegate to Lower-level
A• 2015 Sept. Implementation Measures for Authorities a Group of Administrative
Work Plan for Energy Conservation and
the Disclosure of Automotive Licensing Items 《取消一批行政许可事项的
Emission Reduction During the “13th Five-
Maintenance Technical Information 《汽决定》
Year Plan” Period 《“十三五”节能减排综
车维修技术信息公开实施管理办法》
合工作方案的通知》 H• 2019 Sept. Guide of the Anti-Monopoly
B
• 2016 Apr. Provisions for the Committee of the State Council for
E• 2018 Aug. New Energy Vehicle Maintenance
Administration of Motor Vehicle Automotive Industry 《汽车业的反垄断指南》
Technical Standards 《新能源汽车维护技术
Maintenance 《机动车维修管理规定》
标准》 I• 2021 Feb. Guidelines on Promoting
F• 2019 Jul. Provisions for the Administration Automotive Consumption in the Business
of Motor Vehicle Maintenance (New) 《机动 Sector 《商务领域促进汽车消费工作指引》
车维修管理规定》(新版)
Related Key Related Key Related Key

policies implications policies implications policies implications
• It promoted the industry informalization • New entries for aftermarket can enjoy
G
• It requires repair companies to and built an electronic health system simplified procedures and reduced cost.
C
improve transparency to consumers for automobiles based on VIN code. • It required the licensing system
A B
on the source, price and service of • It accelerated further development of represented by main engine factories
parts. H
D the industry by encouraging its and authorized dealerships to open up
• Parts information, maintenance integration with internet. technology, information and parts.
A B technology information from OEMs • It introduced more standardized • There will be further development of
are required to be more transparent E F requirements for motor vehicle I auto modification market and cultivation
and open. maintenance and operation. of auto modification culture.
• It promotes the development of • Encouraging the compliant • It defines the rights of customers to
B H
motor vehicle maintenance F development of chain maintenance choose maintenance enterprise and
enterprises’ credit system. enterprises. repair parts.

Definition and Description of Auto Repair and Maintenance Service
- Auto repair and maintenance service refers to a wide range of mechanical and electrical services for
automotive vehicles.
• Auto repair and maintenance is the combination of auto repair and auto maintenance. The major difference between auto repair and
maintenance lies in the fact that auto repair is conducted when a vehicle is not performing well and needs to be fixed, while auto
maintenance is a regular service that will help prolong the useful life of vehicles.
Definition and description of auto repair and maintenance services, China
Auto repair Auto maintenance

• Auto repair refers to the process of using technical
• Auto maintenance is to perform vehicle services in the
methods to restore the normal function of vehicles.
period specified by the manufacturer.
• According to the scope of work, auto repair can be
• According to the operation interval, maintenance content
divided into four categories, major repair, current repair,
and operating conditions, auto maintenance can be
assembly repair and parts repair.
divided into several categories.
1 Major repair of vehicle （汽车大修） 1 2
Daily maintenance Periodic maintenance
• Repair or replacement of auto parts to restore the car’s
（日常维护）（周期维护）
intact technical condition and complete (or nearly complete)
• Cleaning, • Maintenance carried
restoration of the vehicle’s service life.
replenishment and out at pre-set travel or
2 Current repair of vehicle （汽车小修） safety inspections time intervals
• Repair or replacement of individual parts to eliminate the 3 4

Elementary Complete maintenance
malfunctions and hidden dangers that occurred during the maintenance （二级维护）
operation of the vehicle, and to restore the operation （一级维护） • Inspections and
capacity of the vehicle. • Inspections and operations on steering
operations on braking control, suspension,
3 Assembly repair （总成修理） and operating systems tires and engine
5 6
• Work to restore the intact technical condition or working Seasonal maintenance Running-in maintenance
capacity and service life of the cars’ assembly. （季节维护）（走合维护）
4 Parts repair（零件修理） • Maintenance carried • Maintenance carried
out to adapt the out at the expiry of
• Work to restore the performance and service life of auto seasonal changes the running-in period
parts.
Source: State Administration for Market Regulation, Standardization Administration of PRC, China Insights Consultancy 25
Market Size of Auto Repair and Maintenance Service in China
- The market size of auto repair and maintenance service in terms of GMV in China reached
RMB845.7billion in 2022; the market size of repair and maintenance services provided by IAM is
expected to keep growing to RMB1327.3 billion in 2027
Market size of auto repair and maintenance service in terms of GMV, breakdown by
service provider, China, 2018-2027E Key analysis
RMB billion CAGR
• The market of auto repair and
2018-2022 2022-2027E maintenance services has experienced a
1,400 Authorized dealership 6.5% 6.9% 1,327.3 stable and solid increase as the total
1,300 IAM 18.6% 12.6% 1,231.4 parc of passenger vehicle in China
1,200 1,133.6 growing. Meanwhile, the average vehicle
Total 10.7% 9.4%
1,100 1,033.0
age is getting older, the demands for
1,000 938.3
maintenance are expected to rise
691.1
900 652.2 continuously.
845.7
800 774.3 610.9 • The market size of auto repair and
693.4 568.6 maintenance service in terms of GMV in
700 636.0 531.1
600 562.4 China reached RMB845.7 billion in 2022,
494.8
469.6 with a CAGR of 10.7% growing from
500 442.9
418.6 RMB562.4 billion in 2018. The market
400
384.8 size is expected to reach RMB1,327.3
300 579.1 636.2
522.7 billion in 2027, representing a CAGR of
407.1 464.5
200 350.8 9.4% between 2022 and 2027.
250.5 304.7
100 217.4
177.6 • Specifically, The market size of repair
0 and maintenance services provided by
2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E
IAM has increased at a CAGR of 18.6%
IAM as %
of total 31.6% 34.2% 36.1% 39.3% 41.5% 43.4% 45.0% 46.1% 47.0% 47.9% from 2018 to 2022 and reached
GMV RMB350.8billion in 2022. As more and
more passenger vehicles go off warranty,
Average expenditure on repair and maintenance per car per year, 2018-2027E IAM is becoming a preferred channel for
RMB car owners. The market size of repair
and maintenance services provided by
4,000 3,550.5 IAM is expected to keep growing to
2,736.0 3,090.5
RMB636.2 billion in 2027, registering a
2,000 CAGR of 12.6%.
0
2018 2022 2027E
Breakdown of Auto Maintenance Service by Service Providers
- As of 2022, IAMs carried out about 75.1% in the total order volume of auto maintenance service for
passenger vehicle, which is expected to rise to approximately 92.3% in 2027
Breakdown of auto maintenance service for passenger vehicle in terms of order

volume, by service provider, China, 2018-2027E Key analysis
Authorized dealership IAM

• IAM stores provide more convenient
auto service as there are numerous
100.0 100.0 100.0 IAM stores located all around cities
100.0% 7.7%
24.9%
and counties, whereas many of
80.0% 44.5% authorized dealerships are located far
60.0% away from communities.
92.3% • When choosing auto service providers
40.0% 75.1%
55.5%
for regular maintenance services such
20.0% as oil change and tire change, car
0.0% owners are more likely to go to IAM
2018 2022 2027E stores for more convenient services
and affordable prices.
• As of 2022, IAMs carried out about
Breakdown of auto maintenance service for passenger vehicle without warranty 75.1% in the total order volume of auto
in terms of order volume, by service provider, China, 2018-2027E maintenance service for passenger
vehicle, which is expected to rise to
Authorized dealership IAM approximately 92.3% in 2027.
• For passenger vehicle without
100.0% 100.0% 100.0%
100.0% 1.3% warranty, IAMs carried out about
20.1% 9.1%
90.9% in the total order volume of auto
75.0%
maintenance service in 2022. By 2027,
50.0% 90.9% 98.7% approximately 98.7% of the total auto
79.9%
25.0%
maintenance service orders for
passenger vehicle without warranty is
0.0% expected to be fulfilled by IAM stores.
2018 2022 2027E

Definition and Description of Auto Repair and Maintenance Service
- Auto parts can be divided into four categories, maintenance parts, consumable parts, repair parts
and crash parts.
• In terms of replacement frequency, maintenance parts are most commonly used and need to be replaced periodically, followed by
consumable parts that need to be replaced regularly. The two categories of auto parts are easy to install and require lower technical
skills. However, repair parts and crash parts are relatively rarely placed and require higher technical skills to install.
Categorization of auto parts

Common
parts Maintenance parts
• Auto parts that are most commonly seen and need to be replaced
periodically, such as oil and filters.
• Installations of such parts require low technical skills and its relatively
easy to install.
Motor oil Oil filter, fuel filter, air filter
Consumable parts
• Auto parts that are easily worn out and need to be replaced regularly,
such as tires, batteries and brake pads.
• Installations of such parts require low technical skills and its relatively
easy to install.
Tire Battery Windshield wipers
Repair parts
• Auto parts that are relatively rarely replaced and require high
standards of technical, such as clutches and generators.
• Installations of such parts require some technical skills.
Alternator Shock absorber Clutch
Crash parts
• Auto parts that are replaced after car accidents, such as bumpers,
headlights and sensors.
• Installations of such parts require high technical skills and are
Rare relatively difficult to install.
Bumper Headlight
parts

Market Size of Major Auto Parts in China
- The sales volume of tire in China reached 193.5 million units in 2022 and is expected to increase to
273.8 million units in 2027; the sales revenue of motor oil in China grew to RMB111.9 billion in 2022
and is expected to reach RMB143.8 billion in 2027.
Market size of tire, in terms of sales volume, China, 2018-2027E Key analysis
Million units CAGR • Tire replacement and motor oil are two major
2018-2022 2022-2027E and common items for auto maintenance and
300 repair.
Tire 8.2% 7.2% 273.8
258.7 • The sales volume of tire in China has grown
250 243.8
228.7 from 140.9 million units in 2018 to 193.5
210.7
200 183.6 193.5 million units in 2022, at a CAGR of 8.2%. And
159.3 165.6 it is expected to further increase to 273.8
150 140.9 million units in 2027, registering a CAGR of
7.2% from 2022 to 2027.
100 • The sales revenue of motor oil in China also
experienced an increase from RMB87.0
50
billion in 2018 to RMB111.9 billion in 2022, at
0 a CAGR of 6.5%. And it expected to
2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E continuously grow and reach RMB143.8
billion, representing a CAGR of 5.1% from
Market size of motor oil, in terms of sales value, China, 2018-2027E 2022 to 2027.
RMB billion CAGR • Spending on automotive maintenance by car
owners in China is generally higher in the
2018-2022 2022-2027E
second half of the year, primarily due to
180 Motor oil 6.5% 5.1% higher demands for maintenance services
resulting from climate change in winter
150 138.3 143.8
132.1 seasons and preparation for long-haul travel
125.5
118.8 during the Chinese New Year holidays.
120 107.0 111.9
95.9 99.5 • More car owners perform maintenance on
90 87.0 their vehicles in the second half of the year
given that car sales in China are generally
60 higher in the second half of the year,
especially in the fourth quarter and
30 maintenance schedules are often on an
annual basis (if not based on mileage)
0
2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E
Price markup of tire and motor oil
- The total price markup of tire is around 21% whereas the total price markup of motor oil is around
50%
Price markup* of tire and motor oil
+10%
+5% +5% 121
100 +11 +21.0%
+5 +5
~35%
Tire
Ex-factory price Level 1 distributor Level 2 distributor Retailer markup Retailing price
markup markup
36%
150
+5% +5%
+40 +50.0%
100 +5
+5
~50%
Motor oil
Ex-factory price Level 1 distributor Level 2 distributor Retailer markup Retailing price
markup markup
xx% Manufacturer gross margin
Note: markup is calculated based on ex-factory price; ex-factory price of tire and motor oil is simplified as 100.
Definition and Description of Car Wash and Auto Detailing Service
- Car wash and auto detailing is the operations to keep vehicle in a better condition using cosmetics
effect, and it can be divided into four segments, including exterior cleaning and detailing, interior
cleaning and detailing, exterior modification and window tinting.
• Car wash and detailing service refers to systematically performing operations to keep the vehicle in better conditions, mainly cosmetic,
but with no mechanical effect. Car wash and detailing service can be divided into four segments, exterior cleaning and detailing,
interior cleaning and detailing, exterior modification and window tinting.
Definition and description of car wash and auto detailing services, China
1 2 3 4
Exterior cleaning and Interior cleaning and
Exterior modification Window tinting
detailing detailing
• The service focuses • The service focuses • The service refers to • Window tinting
on exterior cleaning on interior cleaning, the process of adding refers to the process
varied according to covering both the cab exterior modifications of applying a thin
the type of facilities, and undercarriage. in vehicles for the laminate film to a
including hand car • Services includes: purpose of changing vehicle's glass in
washes, self-service ✓ Cleaning of the appearance. order to darken it.
car washes and interior • Services includes: • Consumers choose
automatic car washes. ✓ Undercarriage ✓ Spray paint to tint the windows
• Services includes: wash and rust ✓ Exterior color for various reasons,
✓ Car wash inhibitor change such as privacy, sun
✓ Exterior wax ✓ Interior wax ✓ Car tail modification shield, and
✓ Polish ✓ Glazing ✓ Decorative parts improving the
✓ Wheel bright ✓ Air freshener installation functions of air
✓ …… ✓ …… ✓ …… conditioner.

Market Size of Car Wash and Auto Detailing Service in China
- The market size of car wash and auto detailing service in terms of GMV in China reached
RMB273.4 million in 2022, and it is projected to grow to RMB468.9billion in 2027, with a CAGR of
11.4%.
Market size of car wash and auto detailing service, in terms of GMV, China,
2018-2027E Key analysis
RMB billion • The market size of car wash and
CAGR
auto detailing service in terms of
2018-2022 2022-2027E
500
468.9 GMV in China reached RMB273.4
Authorized dealership 2.8% -9.2% billion in 2022, with a CAGR of
450 425.7
IAM 20.7% 18.9% 63.9 12.2% growing from RMB172.7
400 Total 12.2% 11.4% 384.5 billion in 2018. The market size is
81.8
345.1 expected to reach RMB468.9 billion
350
308.0 93.8
in 2027, representing a CAGR of
300 273.4 100.9 11.4% between 2021 and 2026.
247.1 103.8
250 • The market size of car wash and
219.0
197.9 103.3
200 172.7 102.6 405.0 auto detailing services provided by
98.6 343.9 IAM has increased at a CAGR of
150 97.7 290.7
92.5 244.2 20.7% from 2018 to 2022 and
100 204.3 reached RMB170.1billion in 2022.
170.1
120.4 144.5
50 80.2 100.2 • Authorized dealerships majorly
0
provides car wash and auto detailing
2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E services along with new cars sales in
IAM as %
store. However, the dependence of
of total 46.5% 50.6% 55.0% 58.5% 62.2% 66.3% 70.8% 75.6% 80.8% 86.4% car owners on authorized
GMV dealerships weakens as more and
more passenger vehicles go off
Average expenditure on car wash and auto detailing per car per year, 2018-2027E
warranty. IAM is becoming a
RMB preferred channel for car owners.
CAGR: +4.7% The market size of car wash and
2,000 CAGR: +4.4%
999.0
1,254.1 auto detailing services provided by
1,000 840.3
IAM is expected to keep growing to
0 RMB405.0 billion in 2027, registering
2018 2022 2027E a CAGR of 18.9%.
Definition and Description of Sales of Auto Accessories Market in China
- Auto accessories including electronic products, car ornaments and other accessories that are being
added into cars to serve for various purposes
Definition and description of auto accessories, China
Installation required Installation free
1 2 3
Electronic products Car ornaments Other accessories
• Electronic products focus on • Car ornaments are decorative • Other accessories includes a
the electronic products used items that are attached in series of car related items that
on vehicles. vehicles for beauty or comfort serve for various reasons, such
• Services includes: purposes. as self-repair or safety.
✓ Air purifier • Services includes: • Services includes:
✓ Dashboard camera ✓ Seat cushion ✓ Car alarm
✓ GPS navigator ✓ carpet ✓ Fire extinguisher
✓ Reversing radar ✓ Car fragrance ✓ Safety seat
✓ Car humidifier ✓ Car pendant ✓ Tire inflator
✓ …… ✓ Headrest pillow ✓ Car jack
✓ …… ✓ ……
• Dashboard camera • Car fragrance • Car fire extinguisher
• GPS navigation system • Car pendant • Safety seat
Installation services needed

Market Size of Installation-Required Accessories in China
- The market size of installation-required accessories in terms of GMV in China increased from
RMB108.6 billion in 2018 to RMB120.8billion in 2022, with a CAGR of 2.7%; it is projected to reach
RMB135.7 billion in 2027.
Market size of installation-required accessories*, in terms of GMV, China, 2018-2027E Key analysis
RMB billion
CAGR
• The market size of installation-
2018-2022 2022-2027E
180 required accessories in terms of
Authorized dealership -3.1% -3.7% GMV in China increased from
IAM 13.1% 8.2% RMB108.6 billion in 2018 to
160
Total 2.7% 2.4% RMB120.8billion in 2022, with a
140 135.7
CAGR of 2.7%; it is projected to
133.2 reach RMB135.7 billion in 2027.
130.1
126.8
123.7
120
119.4 120.8 • The GMV of installation-required
114.4
108.6 110.4 accessories provided by IAM
55.0 reached RMB54.3 billion in 2022,
58.4
100 60.6
62.9 growing from RMB33.2 billion in
64.8
68.9 66.5 2018. And it is projected to keep
80 69.8 increasing to RMB80.7 billion in
71.6
75.4 2027, registering a CAGR of 8.2%.
60 • As more and more passenger
vehicles go off warranty, IAM is
40 74.9 80.7 becoming a preferred channel for
69.5
58.9 64.0 car owners. The GMV of
50.5 54.3
20 38.7 44.6 installation-required accessories
33.2 provided by IAM accounted for
45.0% in the total GMV as of 2022,
0
2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E and is expected to account for
IAM as %
59.5% in the total GMV by 2027.
of total 30.6% 35.1% 39.0% 42.3% 45.0% 47.6% 50.4% 53.4% 56.2% 59.5%
GMV
Note: Installation-required accessory refers to auto accessory that requires installation service, amongst others
including in-vehicle electronic product such as GPS navigator and auto audio.
3. Emergence of the Integrated Online-and-Offline
Platform of Automotive Service Market in China
Pain Points of Automotive Aftermarket in China: Car Owners
-The key pain points of car owners in China are lack of knowledge, experience and operation
conditions, expensive and limited service coverage from authorized dealership, distrust in products
and services provided by IAMs, lack of seamless and integrated online-and-offline service
Pain Points Key Analysis
1 • Unlike car owners in the U.S., Chinese car owners have less knowledge and experience in car repair.
• In addition, due to the cost advantages of Chinese labor and the inadequacy of operating conditions such
Lack of knowledge,
as garages and tools, Chinese car owners highly rely on the “DIFM” automotive services provided by
experience and authorized dealerships or IAMs. However, due to the deficiencies that authorized dealerships and IAM
operation conditions stores currently have, car owners in China have few choice of automotive service provider that offers
convenient, trustable and affordable auto parts and services.
• The selection of automotive service providers that offers a combination of convenient, trustworthy and
2 affordable products and services for car owners in China is limited. For instance, when having their cars
serviced, car owners may face long waiting time for service completion or have to pay a premium for
Undersupply of products they need. The service stores may lack skilled technicians to address the specific car problems
quality service stores and may take an extended amount of time to address and may not be able to address the issue in one go.
• Due to highly fragmented and complex nature of the automotive service market, car owners in China often
face a predicament of choice in which they have to sacrifice certain needs for others. These considerations
include convenience, service quality, product quality and authenticity and affordability.
3 • Car owners lack trust in the products and services provided by IAMs despite of their numerous stores and
affordable prices. Due to the low chain rate in the IAMs stores in China, it is difficult for consumers to build
up brand awareness of IAMs, which contributes to their distrust of the parts and services provided by IAMs.
Distrust in products Only 4.8% of the IAM stores in China are chain operated, with a significant gap compared to 46.6% in the
and services U.S. IAM stores in China typically feature an undersupply of authentic auto parts and inconsistent service
provided by IAMs standards. IAMs and technicians tend to maximize short-term sale of services and products, given the lack
of continuous feedback and deep customer relationships. Often times, the demand for service is non-
discretionary, and customers do not have good knowledge of the products needed. Such information
asymmetry may result in customers’ distrust and unpleasant experience.
4 • Given the proliferation and reliance on local e-commerce channel, Chinese customers are generally more
Lack of seamless accustomed to internet service that can connect their online and offline experience seamlessly when
and integrated addressing their various daily needs. However, most automotive services providers only offer offline
online-and-offline services without convenient online accesses such as online booking, online diagnosis, bringing subpar
service user experience for car owners.

Challenges of Automotive Aftermarket in China (1/2)
- The challenges of automotive aftermarket in China include fragmented market with low
standardization, limited brand awareness and service standardization, low digitalization and multi-
layered distribution network combined with information asymmetry
Challenges Key Analysis
1 • As of December 31, 2022, there were approximately 895.9 thousand

automotive service stores in China, and only 7.8% of them are chain stores. On
average an automotive service store in China only served 305 passenger cars
Fragmented market per year in 2022, much lower than in the U.S. (1,200 passenger cars per year).
leading to low The low standardization level and inefficiency of China’s automotive service
standardization stores imply high potential in terms of improvement of operational efficiency
and associated value creation.
2
• Due to low chain rate and limited brand awareness, the traditional IAMs in
China have more difficulties in acquiring new customers and repeated orders,
compared to authorized dealerships. And lacking sufficient customer traffic and
orders from car owners, the traditional IAMs in China can rarely realize cost
effectiveness in their supply chain.
• Under the extensive less-regulated market, there are numerous small-to-
Limited brand
medium independent automotive service players, especially in lower-tier
awareness and service
regions. And the majority of chain store players in China are operating under
standardization the light-franchising model, which leads to limited control over stores. Given
numerous auto part SKUs with total SKUs over 50 million units and core SKUs
over 0.5 million units, most of small independent automotive service players in
China are unable to provide comprehensive services in absence of cross-brand
product manuals or databases, and are limited in terms of service
standardization.

Challenges of Automotive Aftermarket in China (2/2)
- The challenges of automotive aftermarket in China include fragmented market with low
standardization, limited brand awareness and service standardization, inefficient and complex
infrastructure, multi-layered distribution network combined with information asymmetry
Challenges Key Analysis
3 • The supply chain of the automotive service market in China is characterized by delivery
inefficiencies and low inventory turnover. Automotive service generally involves vast,
complicated and heavy auto part SKUs with low levels of digitalization. Paired with scattered
warehouse locations, it is not uncommon for auto part products to circulate nationwide for
extended periods of time before reaching the end customer.
• Without digitalized user interfaces and systems, the traditional IAMs lack data and visibility on
consumer demand and preferences, which further leads to the incomprehension of customer
needs and low service quality.
Inefficient and complex
• Moreover, the numerous auto part SKUs and the complicated traditional distribution system
infrastructure require digitalization capabilities. However, the limited access and data analytics abilities of
stores to order information leads to a mismatch between supply and demand and hence a
bottleneck to supply chain efficiency improvement, which means large but redundant SKU
inventory and low turnover rate.
• Low digitalization in IAM further limits the improvement of efficiency and scalability in
traditional IAM stores. For instance, in the absence of digital platform and standardized
transaction system, it is difficult for the operators of traditional IAM store to effectively analyze
and manage the store performance, or to optimize location for new outlets.
4
• With inadequate policy regulations, insufficient standards and certification processes
for massive SKUs of auto parts, and numerous offline independent stores nationwide,
Multi-layered China’s automotive service supply chain features with multiple layer of distributors.
distribution network Such long and inefficient distribution network leads to opaque pricing, inauthentic
combined with products, and numerous unmet consumer needs. Given the distance to customers,
manufacturers may not receive the most accurate demand picture of their products,
information asymmetry
leading to uninformed business decisions.

Value Proposition of Integrated O&O Automotive Service Platform
- Integrated O&O automotive service platforms add values by improving consumer experience,
enlarging customer base for offline stores, achieving lower costs and improving efficiency, providing
effective store operation and training supports.
Integrated O&O automotive service model

Online Offline
• Abundant selection of products with transparent pricing • Standardized process
• Accurate matching for auto parts and car models • Transparent and trustworthy service
• Convenient online searching, booking, purchase and • Wide store coverage of locations with close proximity to
payment experience customers
• Comprehensive maintenance reports and detailed • Highly efficient supply chain
quotations • Well-qualified technicians
• Ability to manage the whole lifecycle of vehicles through • Strictly controlled store management
the online channel
• Ability to live monitor repair process
Value propositions Key analysis
1
• O&O platforms can improve consumer experience with transparent price, high-quality
Improve consumer
products and convenient service, therefore enhancing service efficiency and customer
experience
stickiness with high brand awareness through the digitalization of service process.
2 • O&O platforms are able to enlarge customer base for offline stores by realizing customer
drainage to offline stores from online channels. With a massive database, integrated O&O
platforms can realize accurate and instant match between car models and auto parts for
Enlarge customer base for
users, and prompt them to get required auto parts and services from offline stores.
offline stores
Moreover, with historical order information of users, they keep a good understanding of
the service cycle for car owners and obtain repeated orders.
3 • With economies of scale built up based on the accumulation of online and offline users,
Achieve lower costs and integrated O&O platforms are able to optimize supply chain structure and lower
improve efficiency in supply purchasing cost by cooperating with auto parts manufacturers directly. Furthermore, with
chain better knowledge of the service cycle and consumer preferences, they can leverage data
analytics abilities to optimize the supply chain system for better operating efficiency.
4
Provide effective store
• Provide effective store operation and training support to mechanics and offline stores to
operation and training
improve the service quality and standardization level.
support
Rising Trends of NEV in China
- NEV penetration rate in passenger car parc increased from 1.1% in 2018 to 4.6% in 2022, and is
expected to reach 20.5% by 2027, driven by the booming demand of NEV passenger cars. The parc
of NEV passenger cars in China was 12.6 million as of December 31 2022, consisting of 10.4 million
BEV and 2.2 million PHEV
NEV penetration rate in passenger car parc, China, 2018-2027E
NEV penetration rate

20.5%
16.8%
13.4%
10.2%
7.3%
4.6%
2.8%
1.1% 1.5% 1.9%
2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E
In million 2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2026E
Passenger
205.6 224.7 241.6 260.4 273.6 293.0 312.9 333.2 353.4 373.8
car parc
ICEV 203.3 221.3 237.1 253.0 261.0 271.6 281.0 288.7 294.0 297.2
NEV 2.3 3.4 4.5 7.4 12.6 21.4 31.9 44.5 59.4 76.6
BEV 1.9 2.8 3.7 6.1 10.4 17.2 25.8 36.4 48.8 63.0
PHEV 0.4 0.6 0.8 1.3 2.2 4.2 6.1 8.1 10.6 13.6
Note: figures may not add up to the total number after roundoff.
Implication of Rising NEV Trends to the Automotive Service Market in China (1/2)
- The maintenance and repair service for NEV and ICE mainly differs in power system; the annual
cost of maintenance and repair for a NEV is approximately 0.7 times that for an ICE vehicle.
Major parts required maintenance, BEV, PHEV and ICE vehicle
Battery Electric circuit Engine oil Oil/fuel/air filter Spark plug Brake calipers Chassis Tire Other
capacity test inspection change replacement replacement replacement maintenance replacement wearing parts
BEV Accounts for ~50% of BOM Increased demand due to

NEV cost of an NEV with stress on higher vehicle weight of NEVs
replacement servicing
PHEV
ICE
ICE
• NEVs and ICE vehicles have very different power systems, thus the maintenance service for the power system of NEVs and ICE
vehicles is quite different in major maintaining items and corresponding cost. Other than maintenance items for power system, the rest
items required regular maintenance are very similar for both NEVs and ICE vehicles.
• More specifically, the maintenance for BEV’s power system only involves the items related to the motor and battery whilst the
maintenance for PHEV’s power system involves motor, battery and transmission. Generally, the maintenance for BEV’s motor and
battery costs less than the maintenance for ICE vehicle’s motor and transmission, as the former only involves inspection and testing.
Implication of Rising NEV Trends to the Automotive Service Market in China (2/2)
- Without the requirement of engine maintenance and repair services, the annualized expenditure on
regular maintenance and repair service for BEVs is approximately 28% lower than that for ICEVs
excluding the battery replacement cost. Including the battery replacement cost, the expenditure for
BEVs will be approximately 155% higher than that for ICEVs.
Comparison of annualized expenditure on regular maintenance and repair

services over the entire lifecycle of a vehicle, by ICEV/PHEV/BEV (Assume
the annualized expenditure for an ICEV to be 100) (1), (2), (3) Key Analysis
• Compared to ICE vehicles, PHEVs require additional

maintenance services for battery power system. Therefore, the
183.7 255.2
annualized expenditure on regular maintenance and repair for a
PHEV is approximately 13% higher than that for an ICE vehicle.
• Unlike ICEVs and PHEVs, BEVs do not require maintenance

100.0 (41.9) and repair services for the engine， such as motor oil change,
4.6 8.8 71.5
filter replacement and spark plug replacement. However, an
offsetting factor, with the large battery packs, the average
weight of a BEV is usually higher than that of an ICEV, leading
ICEV Powertrain Tire and Battery Battery BEV (incl. to more wear and tear of tire and suspension, both of which are
BEV
chassis service (4) replacement battery key products and services that the Company offer across its
parts replacement) store network. Furthermore, given battery packs account for 30-
40% of BOM costs, it is expected that additional services will be
created, including but not limited to battery inspection,
55.1 167.8 balancing and testing.
3.9 8.8 112.7
100.0 0.0 • With regular maintenance, the lifecycle of battery packs in
NEVs is around 8 years, after which the battery packs may
need to be replaced by new packs. Therefore, from the
perspective of the entire lifecycle for NEVs, the cost for battery
Tire and Battery Battery PHEV (incl. packs replacement will become considerably significant
ICEV Powertrain PHEV
chassis service (4) replacement battery compared to the total expenditure on maintenance and repair
parts replacement) services.
Notes:
(1) Regular maintenance and repair services include maintenance and repair for powertrain, braking system, tires and other wearing parts, and exclude collision
repair;
(2) Annualized expenditure is measured based on a typical ICEV/PHEV/BEV with an average MSRP of approximately RMB200 thousand during the first five
years of the vehicle life;
(3) Annualized battery replacement expenditure is calculated as battery pack replacement expenditure divided by the entire lifecycle of a vehicle (12 years);
(4) Battery service refers to battery testing and inspection service majorly including battery capacity test and servicing.
4. Competitive Analysis of the Automotive Service Market
in China
Ranking of Leading Automotive Service Providers in China (1/2)
- The Company ranked first among approximately 680 thousand automotive service providers in
China, in terms of the number of stores as of December 31, 2022. With 4,653 Tuhu workshops and
20,870 partner stores, the Company has built up a national network covering a majority of prefecture-
level cities in China.
Ranking of leading automotive service providers in China, in terms of store number, December 31, 2022
Number of Number of Number of

Automotive service stores(2) as of stores(2) as of stores(2) as of
Ranking(1) Positioning
providers December 31, December 31, December 31,
2020 2021 2022
Integrated O&O
1 The Company automotive service 2,488 3,853 4,653
provider
2 Company A(3) Traditional IAM ~2,000 ~2,800 ~4,000
Integrated O&O
3 Company J(4) automotive service ~550 ~1,800 ~2,000
provider
4 Company B(5) Traditional IAM ~1,600 ~1,700 ~1,600
5 Company C(6) Traditional IAM ~1,200 ~1,500 ~1,500
Integrated O&O
6 Company D(7) automotive service ~1,200 ~1,480 ~850
provider
The company ranked first in terms of number of stores as of 31 March 2023 among all automotive service providers in China. Tuhu is the
leading independent automotive service brand in China in terms of the number of automotive service stores operated and brand
recognition.
Note:
(1) In terms of number of stores
(2) Including self-operated stores and franchised stores
(3) Company A is a public multinational energy and petrochemical company that provides automotive fuel and motor oil in China and adopts franchise model providing
automotive services
(4) Company J is an integrated O&O automotive service provider launched in late 2019, and owned by a U.S.-listed e-commerce company, adopting franchise model
(5) Company B is an automotive service provider established in 2008 and owned by a US- and France-listed international tire manufacturer, adopting franchise model
(6) Company C is an automotive service provider established in 2015 and owned by a domestic OEM in China, adopting franchise model
(7) Company D is an integrated O&O automotive service provider launched in 2018 and owned by an HK-and-U.S.-listed e-commence platform, adopting franchise
model Source: China Insights Consultancy 46
Ranking of Leading Automotive Service Providers in China (2/2)
- The Company ranked third among all automotive service providers, in terms of automotive service
revenue in 2022
Ranking of leading automotive service providers in China, in terms of automotive service revenue, 2022
Automotive service
Market
Ranking(1) Automotive service providers Positioning revenue(6) in 2022 (RMB
share(7)
billion)
1 Company E(2) Authorized dealerships 24.6 2.0%
2 Company F(3) Authorized dealerships ~14.2 1.1%
Integrated O&O
3 The Company automotive service 11.5 0.9%
provider
4 Company G(4) Authorized dealerships ~10.1 0.8%
5 Company H(5) Authorized dealerships ~10.0 0.8%
Notes:
(1) In terms of automotive service revenue in 2022 (including authorized dealerships and IAMs)
(2) Company E is an HK- and US-listed auto dealership group, established in 1998
(3) Company F is an A-share listed auto dealership group, established in 2006
(4) Company G is an HK-listed auto dealership group, established in 1992
(5) Company H is a privately owned auto dealership group, establishing its automotive business in mainland in 1993
(6) Revenue from automotive services includes auto maintenance and repair, car wash and detailing, installation-
required accessories and excludes auto finance and insurance
(7) Automotive service revenue as % of the total automotive service market in China in 2022

Ranking of Leading IAMs in Automotive Service Market in China
- In 2022, the company generated revenue of RMB 11.5 billion, making it China’s largest independent
automotive service platform in terms of revenue with a market share of 0.9%.
Ranking of leading IAMs in automotive service market in China, 2022
Automotive service revenue

Ranking(1) IAMs Positioning Market share(2)
in 2022 (RMB billion)
Integrated O&O
1 The Company automotive service 11.5 0.9%
provider
2 Company A Traditional IAM ~3.2 0.3%
3 Company B Traditional IAM ~2.3 0.2%
Integrated O&O
4 Company J automotive service ~1.6 0.1%
provider
Integrated O&O
5 Company D automotive service ~1.3 0.1%
provider
In 2022 and the three months ended 31 March 2023, the company generated revenue of RMB11.5 billion and RMB3.3 billion,
respectively, making it China’s largest independent automotive service platform in terms of revenue.
Note:
(1) In terms of automotive service revenue in 2022
(2) Automotive service revenue as % of the total automotive service market in China in 2022

Ranking of leading market players in tire and motor oil market
- The Company is the largest retailer of replacement tire and motor oil in terms of sales volume in
China in 2022
Ranking of leading retailers of passenger vehicle tire in terms of tire sales volume, 2022
Ranking Providers Sales volume (million units)， 2021* Sales volume (million units)， 2022*
1 The Company 13.1 12.5
2 Company B 4-5 4-5
3 Company D 2-3 2-3
The Company has been the top retailer for passenger vehicle replacement tire in China since 2016, in terms of sales volume and sales value.
The Company sold approximately 12.5 million and 3.5 million tires in 2022 and the three months ended 31 March 2023,respectively, making it the
largest replacement tire seller in China.
Ranking of leading motor oil providers in terms of sales volume, 2022
Ranking Providers Sales volume (million liter)*, 2021 Sales volume (million liter)*, 2022
1 The Company ~41 43.6
2 Company A ~17 ~18
3 Company K(1) ~14 ~16
The Company has been the top retailer for motor oil in China since 2018, in terms of sales volume.
The average procuring price of motor oil from certain premium brands offered to authorised dealerships is around 30% higher than the same
obtained by the company.
Note:
(1) Company K is a British oil company that provides automotive motor oil.
The Company has been the top retailer for chassis parts in China since 2017, in terms of sales value
The Company has been the top retailer for storage battery in China since 2019, in terms of sales value
The Company became No.1 for battery & charging pile maintenance and repair services in China in 2022.
* Sales through self-operated store (including self-operated stores on e-commerce platforms) and franchised store. Source: China Insights Consultancy 49
Comparison of Leading O&O Automotive Aftermarket Service Providers
-The Company ranked first in terms of revenue in 2022 among all integrated O&O players in China.
The Company is the leading integrated O&O platform for automotive service in China in terms of
revenue and stores operated.
Ranking and comparison of leading O&O automotive aftermarket service providers, 2022
RMB billion
Brand The Company Company D Company J
Year of market entry 2011 2018 2018
Number of stores as
of Dec.31 2022 4,653 ~850 ~2,000
MAU of Dec. 2022 9.0 million ~4 million ~1 million
11.5 ~1.3 ~1.6

Revenue in 2022
• Cannot self-produced auto parts

• With its own brands of auto parts
• With its own brands of auto parts and no its own brands of auto
and can self-produced auto parts
• With self-developed procurement parts
Supply chain • With self-developed procurement
system • With self-developed
system
model • With self-developed warehouse and procurement system
• With self-developed warehouse and
logistics • No self-developed warehouse
logistics
and logistics
Strong control on
franchised stores ✓  ✓
The company’s average MAU reached 10.2 million in the three months ended 31 March 2023, making its platform the largest car owner
community amassed by automotive service providers in China. Its growing service network of over 4,700 Tuhu workshops and over 19,000
partner stores spans across the entire country, covering a majority of prefecture-level cities.
*Note: Company J is an integrated O&O automotive service provider established in 2018 and owned by a U.S.-listed e-commerce company,
adopting franchising model
Comparison of Leading O&O Automotive Aftermarket Service Providers
- The Company’s franchise policy is similar to that of the peers. And its franchising fees are in line
with that of industry peers.
Comparison of franchising policy between leading O&O automotive service platforms
Brand The Company Company J Company D
Upfront franchise 200 thousand2 150 thousand3 100 thousand4

fee1 (RMB)
Monthly fixed
management fee5 8 thousand None 4 thousand
(RMB)
Profit-based Profit-based/fixed fees Revenue-based

Basis
Monthly
royalty The higher of: (i) 15% of store-level
fee Fee 10% of store-level operating profit gross profit increment6, or (ii) fixed fees 1% of store-level revenue
rate of RMB3,000
*Note
1. Lump sum payment for the first three years. After the first three years, franchisees are subject to annual franchise fee payment at separately negotiated rates;
2. Ranging from RMB100,000 to RMB400,000 based on store types and regions (RMB200,000 is a standard fee in most cases);
3. Company J offers certain preferential policies, including discount to franchise fee, to franchisees that are among the first to enter each city, in which cases the upfront
franchise fee for the first three years can be reduced to RMB50,000 at maximum;
4. To be effective after 31 March 2022. Before that date, the upfront franchise fee for the first three years is RMB60,000;
5. Management fee related to store IT system support, operational support, and supporting staff;
6. Equals to store-level gross profit less the benchmark. For newly-opened franchised stores, the benchmark is calculated as the average of gross profits during the 4th to
6th months since operation (excluding the 1-month trial period); for franchised stores converted from existing stores, the benchmark is calculated as the average of
gross profits during first three months since operation (excluding the 1-month trial period).
Competitive Advantage of the Company (1/2)
- The Company has efficient supply chain network, big data capability and strong internal
management capability to ensure the high quality services and enhance the operational efficiency
Competitive advantages
Efficient supply chain network

• The Company has developed a vertical value chain with a strong supply chain network through the use of
technology, by interconnecting well-known domestic and global auto parts manufacturers, distributors,
small and medium aftermarket workshops, and consumers.
• The Company can provide various products through its well-established supply chain network, which can
1 Integrate upstream resources to ensure the lowest procurement costs. In addition, the Company has self-
developed logistics operation system to support the operating efficiency and inventory management by
adopting data-driven technology systems.
• The Company’s growing economies of scale and bargaining power across the store network enable it to
continually drive more competitive pricing. The Company is able to leverage its scale to obtain favorable
terms from the suppliers and, as a result, has considerable advantage over competitors without such scale
and traffic.
Big data capability
• The average MAU reached 9.0 million in 2022, making the company’ platform the largest car owner
community amassed by automotive service providers in China. The Company optimize upstream
The
products based on the feedback analysis from customers to make the product experience better and
Company 2 provide the customized services.
• The Company use big-data and other technologies to assures transparency in auto maintenance and
repair service process, and use big data to make business planning, realize optimal inventory
management and improve the service quality.
Strong internal management capability

• The Company adopt the asset-light franchise model for majority of Tuhu branded stores with a strong
control in a systematic and standardized way to ensure the high service quality. With the largest proprietary
store and technician management system in terms of DAU in China, the Company has a strong internal
3 management capability to manage the training, supply chain, inventory, finance, and marketing of the
franchised stores to establish an efficient management mechanism, which can increase the franchisee
loyalty, gain recognition from consumers, and build a good brand reputation.
• The Company’s SaaS solutions provide ecosystem participants tools to manage all aspects of their
businesses and help them establish or improve systems.

Competitive Advantage of the Company (2/2)
- The company serves almost all passenger vehicle makes and models sold in China, and has the
largest and most accurate auto parts database in China; also, the number of lifts per store and daily
service turnover per service station of the company are much higher than the industry average.
The Company’s capabilities of big-data platform and store operation efficiency, 31 December 2022 • As of 31 March 2023, auto parts
database of the company is the
Total car makes largest and most accurate in
The Company
and car models* China, covering over 66,000 car
models under 286 makes and
Car makes ~330
Good coverage for car 280 with a 99.99% of matching
accuracy. Blue Tiger, the
makes and car models
Car models company’s proprietary store and
61 thousand ~65 thousand technician management system,
is also the largest in China in
• The platform of the Company serves most of the passenger vehicle models sold in China, fulfilling the full
terms of DAU.
spectrum of automotive service demands ranging from tires and chassis parts replacement to auto maintenance,
• As of 31 March 2023, Tuhu
repair, detailing and more. By aggregating sporadic automotive service demands onto one platform, customer
workshops are well-equipped to
engagement is significantly increased as compared to the traditional offline automotive service model that is
highly dependent on localized service demands. serve car owners’ needs with an
• As of 31 December 2022, the company’s auto parts database is the largest and most accurate in China, average of 6. 0 car lifts per store,
covering over 61,000 car models under 280 makes and with a 99.99% of matching accuracy. much higher than the industry
• In order to navigate through the vast number of SKUs in the automotive service market, the company have built average of 4.3 car lifts per store
a comprehensive parts-matching big-data platform, which could intelligently identify auto parts and accessories as of 31 December 2022.
suitable to the customer’s car model from approximately 4.3 million SKUs of auto parts as of 31 December 2022. • The company has built a
comprehensive parts-matching
Average big-data platform, which could
number of 6.1*** ~4.3 intelligently identify auto parts
Sufficient service lifts per store and accessories suitable to the
facilities and high customer’s car model from
Daily service approximately 5.4 million SKUs
service turnover turnover**
1.8 ~1.1 of auto parts as of 31 March
per lift on
2023.
average
• The company’s service turnover
• The service turnover per car lift per day in 2022 was 1.8, substantially higher than the industry average of per car lift per day in the three
approximately 1.1 per car lift per day. months ended 31 March 2023
• As of 31 December 2022, the Tuhu workshops are well-equipped to serve car owners’ needs with an average of was 2.2, substantially higher
6.1 car lifts per store, much higher than the industry average of 4.3 car lifts per store. than the industry average of
approximately 1.1 per car lift per
* Number of car makes and car models sold in China day as of 31 December 2022.
** Service turnover only includes auto maintenance and repair service
*** for all Tuhu Workshops, a typical store of which is between 300 to 400 square meters in size. Source: Auto Home, China Insights Consultancy 53
Potential Market for Store Expansion of the Company (1/2)
-Tuhu workshops per million cars in Tier-1 cities and New Tier-1 cities reached 48 and 26 respectively
as of December 31 2022, while the figure was only 12 in Tier-2 and below cities, illustrating an
extensive growth potential for Tuhu in those regions
Potential market for Tuhu Workshops, as of December 31 2022
Car parc Number of Tuhu Tuhu workshops

(million) Workshops per million cars
Tier-1 cities 16.5 786 48
New Tier-1
cities 50.6 1,328 26
Tier-2 and below

cities and 206.5 2,539 12
counties
Tier-3 and below

cities and 156.7 1,552 10
counties
Total 273.6 4,653 17
In Shanghai (as
of September ~4.65 328 71
30 2022)
Source: China Insights Consultancy

54
Potential Market for Store Expansion of the Company (2/2)
-The number of Tuhu workshops per million cars was 13 in tier-2 cities and below cities, as of March
31 2023, compared with 48 and 27, respectively, in tier-1 and new tier-1 cities, implying huge
opportunities to further penetrate into lower tier cities
Potential market for Tuhu Workshops, as of March 31 2023
Car parc Number of Tuhu Tuhu workshops

(million) Workshops per million cars
New Tier-1
cities 50.7 1,354 27
Tier-2 cities 50.1 1,018 20
Tier-2 and below

cities and 208.0 2,626 13
counties
Tier-3 and below

cities and 157.9 1,608 10
counties
Total 275.2 4,770 17
Source: China Insights Consultancy

55
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Industry Report of The Automotive Aftermarket in China: September 2023

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Industry Report of the Automotive Aftermarket in China

Abbreviations: GMV: Gross Merchandise Volume 成交总金额

1 Overview of the automobile market in China

2 Analysis of the automotive service market in China

Emergence of the integrated online and offline platform of automotive

4 Competitive analysis of the automotive service market in China

Passenger vehicle ownership penetration, major countries,

Passenger car per capita, China, 2018-2022

GDP Vehicles per1,000 people

Source: CPCA, CPDA, NBS, China Insights Consultancy 7

20 EU member countries 2.5% 0.6% 0.6%

U.S. 1.1% 0.5% 0.5%

Sales volume of NEV passenger vehicle, China, 2018-2027E Key analysis

Source: CPCA, CADA, Public Security Bureau, China Insights Consultancy 10

Definition and categorization of automotive services

Service categorization Definition and examples

Source: China Insights Consultancy 12

Value chain of automotive service industry in China

Authorised dealership channel

Aftersales department of OEMs Authorised dealerships

Flow of products DIY (Do-It-Yourself) business DIFM (Do-It-For-Me) business

Source: China Insights Consultancy 13

Comparison of passenger car usage between U.S and China

Comparison of automotive service market between U.S and China

China U.S U.S 46.6%

256.3 ~214 ~1200 43.4%

252.1 ~347 ~727 /

273.6 ~896 ~305 7.8%

Passenger car parc Number of IAM* stores in Average parc of passenger

The U.S. 256.3 ~142 ~1,810

China 273.6 ~495 553

Source: Public Security Bureau, BTS, China Insights Consultancy 16

Comparison of passenger car usage between EU member countries and China

China EU member countries

Average expense on auto service per

Comparison of automotive service market between EU member countries and China

Market size of automotive service market, EU Number of automotive service stores,

Source: ACEA, China Insights Consultancy 17

Comparison between authorized dealership and traditional IAM

Service • Providing better service experience from well

Service • Heavier customer flow • Relatively low utilization ratio of workshop

Source: CPCA, CADA, China Insights Consultancy 19

Breakdown of automotive service market by channel, in terms of GMV, China, 2018-2027E

Market drivers Key Analysis

More transparent More standardized More liberalized

C• 2015 Sept. Uniform Coding and Labeling of

Related Key Related Key Related Key

Source: China Insights Consultancy 23

Auto repair Auto maintenance

• Repair or replacement of individual parts to eliminate the 3 4

Breakdown of auto maintenance service for passenger vehicle in terms of order

Authorized dealership IAM

Source: CPCA, CADA, China Insights Consultancy 27

Categorization of auto parts

Source: China Insights Consultancy 28

Price markup* of tire and motor oil

xx% Manufacturer gross margin