Kelley Blue Book Co. Inc., the U.S. automotive pricing and information provider, is heading to China.
In a deal announced Thursday, KBB is joint venturing with Beijing-based Bitauto Holdings Limited (NYSE: BITA), which offers Web-based auto industry marketing services in China, and the China Automobile Dealers Association (CADA).
The deal will help the Chinese expand auto-information services for Chinese consumers, including mobile-based apps. Currently, the market for car value and pricing is fragmented, and the deal aims to make Bitauto and KBB a leading contender, especially for the country’s rapidly expanding used-car market.
China’s used-car market is still in a relatively nascent phase because the country’s auto industry has only really taken off in recent years. The CADA estimated that the volume of used cars broke 3 million for the first time in 2009, the same year the country saw new-car sales approaching 14 million. German auto giant Daimler AG estimated in 2011 that the used-car market would hit 4.1 million and grow at a rate of 7 percent a year.
China’s used-car sales are expected to continue to rise in this decade until they reach half of all car sales by 2020, according to Reuters. As the new-car market in China evolves, the ratio of used cars to new cars will rise. Along with it will be a demand for fair pricing information, so KBB sees huge growth potential in a currently underserved part of the Chinese auto market.
“We wanted to provide greater transparency and confidence for consumers, and the valuation products that are being jointly developed will deliver on this,” said Jinjun Shen, executive vice president and general secretary from CADA, in a statement issued Thursday morning.