Tuhu Buys Australia’s mycar Network for A$403m Enterprise Value

The Chinese automotive-services platform is buying mycar’s 279-store Australian network from Continental for an A$403 million enterprise value. Adjusted for inflation, that is less than Continental paid in 2018. But mycar earns only about 3% before tax. We think Tuhu will earn its return, but only by roughly doubling that margin, and while its own profits are falling.

Tuhu’s first large overseas acquisition is more interesting for the price it is paying than for the fact that a Chinese automotive platform is expanding abroad.

The company announced on September 24 that it has agreed to acquire 100% of Conti Trade Australia, owner of the mycar Tyre & Auto network, from Continental. The transaction values the business at A$403 million on an enterprise basis, with an estimated cash payment of about A$278 million at closing, subject to adjustment after completion. The roughly A$125 million gap between the two reflects the seller’s estimated net debt and working-capital adjustments. Mycar operates 279 self-managed service and repair locations across Australia. Completion is subject to approval by Australian competition and foreign-investment regulators.

Cheaper than Continental paid

Continental bought the predecessor business, Kmart Tyre & Auto Service, in 2018. It then had 258 outlets, and Wesfarmers sold it for about A$350 million.

The 2018 figure was a purchase price, not an enterprise value, so the comparison is approximate. In nominal terms, Tuhu is paying about 15% more than Continental did eight years ago, for a network with 21 more locations. Australian consumer prices have risen about 30% since mid-2018, so Continental’s price is worth roughly A$455 million in today’s money. In real terms, Tuhu is paying less than Continental did for a larger network.

That is very different from paying a scarcity premium for a fashionable overseas asset. Continental is in the middle of a wider portfolio restructuring towards a more focused tyre business and is a motivated seller. Tuhu is buying a non-core asset from a strategic owner, not winning a competitive auction.

A large bet relative to Tuhu’s balance sheet

The price is modest for the asset, but large relative to Tuhu.

Tuhu reported first-half 2026 revenue of RMB8.78 billion, up 11.4% year on year. Net profit fell 40% to RMB184 million, and adjusted EBITDA dropped to RMB327.5 million from RMB483.3 million.

Cash and cash equivalents were about RMB1.51 billion at June 30, after a first-half decline of roughly RMB387 million. At about 4.76 renminbi to the Australian dollar, the A$278 million cash payment is about RMB1.32 billion, close to the company’s entire cash balance. The acquisition documents allow Tuhu to use internal resources alongside up to RMB1 billion of bank financing.

This is therefore a major capital-allocation decision, not an experimental overseas outpost. Tuhu is adding debt capacity while its group profitability is falling.

The productivity test

The return depends on what each store earns, and the disclosed figures show the problem. Mycar’s revenue rose 6.7% to A$524.7 million in its 2025 financial year, about A$1.9 million per store. But profit before tax was only A$15.9 million, a margin of about 3%. On those figures Tuhu is paying about 25 times pre-tax profit. The price looks cheap against revenue and against Continental’s purchase price, but against earnings it only works if margins rise. To earn a pre-tax return of around 8% on the enterprise value, Tuhu needs roughly double today’s profit, which means lifting the margin from about 3% to 6%.

Tuhu’s case is operational. It plans to apply its digital store-management systems, procurement, parts supply chain and electric-vehicle servicing capabilities to an existing national network, instead of building Australian locations one by one. Three improvements could lift returns. Central purchasing can reduce parts costs. Tuhu’s software can improve scheduling, inventory turns and technician utilisation. Its experience with EV servicing in China may help mycar adapt as Australia’s vehicle fleet changes.

None of these needs spectacular top-line growth. At this entry price, raising profit per existing store will do more for returns than opening new locations, and purchasing savings plus better technician utilisation could plausibly close the margin gap within five years.

The mix of work also favours Tuhu. Tyres, servicing and repairs are recurring, non-discretionary spending, and in Australia they are competitive but split among many independent workshops and a few national chains. A chain of mycar’s size that can buy parts more cheaply and fill technicians’ diaries more efficiently has room to take share from independents without a price war.

The risk is that Tuhu’s advantages do not transfer. A platform built around Chinese supplier relationships and consumer behaviour will need substantial localisation in Australia, where labour costs, property, the vehicle fleet and parts sourcing all differ. Group overhead for an overseas business could absorb gains in the stores.

Our verdict

We think Tuhu will earn its return, but slowly. The entry price leaves room for mistakes, and its procurement and software advantages address the parts of mycar’s business most likely to be under-managed by a tyre manufacturer that treated it as non-core. The weak point is timing. Tuhu is using most of its cash buffer while its own profits are falling, so integration costs that run over budget will show up quickly in group results.

The first hurdle is approval by the Australian Competition and Consumer Commission and the Foreign Investment Review Board, and whether either attaches conditions on data, supply arrangements or store numbers. The real test is mycar’s first full year inside Tuhu, which will be 2027 if the deal closes around the turn of the year. If the pre-tax margin is on its way from 3% towards 6% by then, without a matching rise in corporate overhead, the deal will look like a cheap purchase of distribution. If it is flat, Tuhu will have spent most of its cash on an overseas network that earns no more than it did under Continental.