Shares in TuanChe Ltd. (Nasdaq: TC) dropped 5% on the morning trading when the company reported 92% decrease in the revenue for the first quarter, though investors were warned of the decline ahead of time.
The Beijing-based auto marketplace said in a statement today that its revenues in the first quarter reached $1.4 million, down 92% year-over-year. Net loss jumped to $8 million in the three months through March, up 62% year-over-year.
In its quarterly report in April, the company has lowered its revenue guidance in the first quarter by 93% due to the COVID-19 pandemic and said expects its offline business to recover by May or June.
TuanChe said it facilitated sales of 2,305 automobiles in the first quarter, down 96% year-over-year. The company said its gross merchandise volume (GMV) for new automobiles sold decreased by 96% to $40 million.
The COVID-19 pandemic has frozen China’s auto market in the first quarter, with year-over-year decreases of 19%, 79%, and 43% in January, February, and March, according to the China Association of Automobile Manufacturers (CAAM).
The company’s offline marketing services, which was featured with auto shows, was curbed under the social distancing. The revenues for the offline sector declined to $0.8 million, down 95% year-over-year.
“In response to these challenges, we took immediate efforts to address three key priorities: ensuring the health and safety of our employees and customers, streamlining our cost structure, and accelerating our online strategy,” Wei Wen, the chief executive officer of TuanChe, said in the statement.
The auto marketplace expanded its online marketing services with a newly formed strategic partnership with Baidu Youjia, Baidu’s auto information service app and the company also collaborated with Alibaba Group (NYSE: BABA; HKEX: 09988)’s auto arm, TMall Auto.
TuanChe also acquired a social CRM cloud system provider for China's automotive industry, Longye International Ltd., on January 13. Thanks to the acquisition, its net revenues generated from a virtual dealership, online marketing services, and others increased by 12% to $0.5 million in the first quarter.
“As the COVID-19 pandemic accelerates the ongoing consumer transition towards online channels, we were, and will continue to be, well-positioned to take full advantage of this shift by further developing our omni-channel initiatives,” Wen said.
TuanChe said it has resumed its offline operations in certain cities since May.
Preliminary data from CAAM showed auto sales in China, the world's biggest vehicle market, may jump to 228 million units in June, up 11% year-over-year.
In the first half-year, the cumulative sales of the auto industry in China are expected to reach 10.2 million units with a year-over-year decrease of 17%. The recovery in China’s auto sales started in April with a 6% year-over-year increase, which was followed by a 15% increase in May.
Shares in TuanChe were trading at $1.55 per share, up 1% on Thursday.