has started displaying vehicles at used car trading platform Uxin's offline outlets to open up new sales channels and increase sales exposure and reach, according to local media.

(Image credit: CnEVPost)

Nio (NYSE: NIO) has started displaying vehicles at used car trading platform Uxin's offline outlets to open up new sales channels and increase sales exposure and reach, local media outlet Jiemian reported today.

Nio's presence in Uxin's offline stores is similar to its planned Nio Post, a lighter store format than Nio House and Nio Space, the report said.

Nio's main focus in Uxin's outlets is to provide model displays and test drives, and recent displays have focused on the ET5, EC6 and EC7, with offline services provided by Nio employees, the report said.

Founded in 2011 and listed in the US in June 2018, Uxin's main business is online used car trading.

In April 2021, Uxin opened its first offline outlet in Xi'an, Shaanxi province, in northwest China, covering 24,000 square meters and accommodating 1,000 cars, according to its website.

In October 2021, Uxin opened its second offline store in Hefei, Anhui province, with a capacity of up to 2,800 vehicles.

Currently, some of Nio's models are only on display at Uxin's Hefei store, and are not yet available at the latter's showroom in Xi'an, according to Jiemian.

The partnership builds on Nio and Uxin's strong relationship, the report noted.

Uxin received a total of $315 million from Joy Capital and Nio Capital in June 2021, and on May 16, 2022, Uxin announced that it had received an additional $100 million from the two investors.

Uxin's operating entity has since moved from Beijing to Hefei and opened offices in NeoPark, an industrial park jointly promoted by Nio and the Hefei government, according to Jiemian.

William Li, Nio's founder, chairman and CEO, is one of the directors of Uxin, according to Uxin's website.

One of the current problems Nio is facing is that sales are too concentrated in first-tier cities and core economic areas. In the first 10 months of this year, Nio delivered about 126,000 new cars, with about 52 percent contributed by customers in Jiangsu, Zhejiang, and Shanghai, and Beijing contributing about 10 percent, Jiemian's report noted.

The first two months of the year were traditionally a slow season for car sales, but the five cities of Beijing, Shanghai, Guangzhou, Shenzhen, and Hangzhou together contributed more than 36 percent of Nio's sales, the report said, adding that Nio is the new energy vehicle (NEV) brand most reliant on first-tier cities.

This has to do with Nio's pricing strategy, with its overall average invoice price ranging from RMB 350,000 ($48,930) to RMB 400,000, and the high price determining that it needs to rely on a big-city clientele with strong spending power, Jiemian said, citing a person familiar with Nio.

Nio's battery swap and other services also started out in big cities, where it has better infrastructure, which was also an influencing factor, the person added.

Nio is currently ramping up the expansion of its sales network, although it unveiled layoff plans earlier this month that will reduce jobs by about 10 percent.

Nio realized in June that there was a problem with the number of salespeople and their ability to sell lagging behind competitors, Li said in an analyst call after the company announced its second-quarter earnings on August 29.

Nio was expanding its sales team on the basis of a 30,000-unit-per-month sales capacity, and hopes to build that capacity initially by the end of September and develop that effectiveness initially in October, he said at the time.

Expanding into lower tier markets is a new goal for Nio and Li.

Nio started the Nio Post program in the second half of this year, with the main goal of setting up lightweight displays in high-traffic areas such as malls and outlets, Jiemian said, citing a person familiar with the matter.

Nio conducts product demonstrations and offers test drives of vehicles at these facilities to enhance brand exposure and capture sales leads, according to the report.

The company is gradually expanding its direct sales network in tier 3 and below cities, changes that began in the second quarter of this year, the report said.

In big cities, Nio's sales network will include 1-2 Nio Houses, several Nio Spaces, and flexible setups of Nio Posts, according to the report.

In lower tier cities, Nio's sales network will be dominated by Nio Spaces, Nio Posts, the report said.

Meanwhile, Nio has also started setting up outlets in areas other than shopping malls, seeking to set up Nio Spaces or Nio Posts in areas with a high concentration of car dealership stores to boost store visits as well as conversions from test drives, according to the report.

Nio delivered 16,074 vehicles in October, up 59.8 percent year-on-year and up 2.77 percent from September. In the January-October period, it delivered 126,067 vehicles, up 36.3 percent year-on-year.

Nio had 3,300 insurance registrations in China last week, down 10.81 percent from 3,700 the week before, according to data shared by (NASDAQ: LI) earlier today.

Between November 1 and November 26, a total of 12,700 Nio vehicles were registered for insurance in China.

Nio will report unaudited financial results for the third quarter on Tuesday, December 5, before the US markets open. It delivered 55,432 vehicles in the third quarter, slightly above the lower end of its guidance range of 55,000 to 57,000 vehicles.

China EV insurance registrations for week ending Nov 26: Nio 3,300, Xpeng 4,400, Li Auto 9,400, Tesla 16,700