Cango Inc. (NYSE: CANG) is a China-based holding company that operates an automotive transaction service platform, connecting dealers, financial institutions, and car buyers. Established in 2010 by pioneers from China’s first automotive finance business, the company initially focused on automotive financing solutions. At its peak, Cango’s platform supported over 50,000 registered dealers and partnered with leading financial institutions such as WeBank and ICBC.
Over time, the company expanded its offerings to include automobile trading solutions in 2015 and after-market services in 2017. In 2022, CANG stock shifted its focus to these areas while scaling down automotive financing facilitation. The company now collaborates with third-party financial institutions to fund existing loans and is exploring options to offer loans without bearing credit risks. Led by an experienced management team, CANG continues to enhance its platform to better serve its customers across the automotive value chain.
Key Cango Achievements
Recently, Cango stock released its Q2 results, where it revealed a number of achievements that had gotten shareholders pleased with the company’s progress. These are discussed below as follows:
- Business Streamlining and Growth: Cango streamlined its business processes, optimized dealer service experiences, and improved supply chain management, leading to steady growth. By the end of Q2, its Cango U-car app accumulated over 130,000 page views and facilitated 266 vehicle transactions.
- Strategic Partnerships and Efficiency: The company onboarded new partners with abundant vehicle inventories, enhanced operational efficiency through rigorous management, and refined processes, increasing resource utilization and operational effectiveness.
- Expanding Vehicle Listings and User Engagement: CANG U-car integrated over 260,000 vehicle listings through strategic partnerships with used car markets, enhancing user engagement on the app by combining offline inventory with digital convenience.
- Member Communities and Dealer Support: Cango established exclusive member communities, enhancing user loyalty, and implemented streamlined transaction rules and risk prevention mechanisms to support seller dealers in improving their operational efficiency.
- International Expansion with AutoCango: Since March 2024, Cango’s international used car platform, AutoCango.com, has gained traction globally, attracting over 180,000 visits, and hosting over 85,000 high-quality used car SKUs from 207 countries.
- Traffic-First Strategy for Global Growth: CANG adopted a traffic-first strategy to create a streamlined and asset-light platform connecting China’s used car dealers with overseas buyers, aiming to position AutoCango as the premier gateway for exporting Chinese used cars.
Cango Q2 2024 Financial Overview
In the second quarter of 2024, Cango (NYSE: CANG) reported total revenue of RMB45.1 million, a significant decrease from RMB675.4 million in the same period of 2023. Guarantee income for the quarter reached RMB20.9 million, reflecting the fee earned on the non-contingent aspect of guarantees under ASC 326, adopted in January 2023. Cost of revenue dropped sharply to RMB26.5 million, representing 58.8% of total revenue, compared to 91.2% in Q2 2023.
Sales and marketing expenses decreased to RMB4 million from RMB12.2 million year-over-year. General and administrative expenses remained relatively stable at RMB39.2 million, while research and development expenses dropped significantly to RMB1.7 million from RMB7.7 million. The company recorded a net gain of RMB10.3 million on contingent risk assurance liability and a net recovery of RMB33 million on provision for credit losses.
Cango’s net income for the second quarter reached RMB86 million, with non-GAAP adjusted net income totaling RMB90.7 million. On a per-share basis, basic and diluted net income per ADS were RMB0.83 and RMB0.76, respectively. Looking ahead, the company forecasts third-quarter revenue between RMB20 million and RMB25 million, subject to market conditions.
Expanded Supply Channels and Improved Profit Margins
Through partnerships with major used car markets, CANG has expanded its supply channels and diversified its vehicle offerings, increasing the range of choices for customers. These collaborations enhance geographic coverage and market penetration, driving greater customer engagement on the platform.
As inventory and market reach grow, transaction volume has risen, resulting in economies of scale and reduced unit costs. This higher volume has also bolstered Cango’s bargaining power, allowing the company to negotiate more favorable terms with suppliers and customers, ultimately improving profit margins and strengthening the business’s overall position.
