The online auto pioneer still makes money by connecting car buyers and sellers, but weak demand, falling ad budgets and new competition are eroding its old advantages



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<h4>Key Takeaways</h4>



<ul>
<li>Autohome's first quarter revenue fell nearly 28%, as automakers cut advertising and fewer dealers paid for its services in a sharply contracting China car market</li>



<li>The company is more protected than car traders that hold inventory, but its results show how China's auto slump is hurting online commerce, advertising and transaction services</li>
</ul>



An extended price war in China's auto sector has already taken a toll on carmakers, dealers and used car traders. Now, the pain is growing more acute in a place that doesn't actually build or stockpile cars.



That place is Autohome Inc. (NYSE:ATHM) (2518.HK), one of China's best known online auto service platforms. Founded in 2005 by car enthusiast Li Xiang, who later built electric vehicle maker Li Auto, Autohome became a go-to destination for Chinese car buyers, offering model databases, reviews, price comparisons and forums.



That legacy makes the company's latest financial results feel bigger than just another soft quarter for a single company. Autohome is a useful gauge for both China's auto market and online commerce. It earns most of its money not by directly selling cars, but by helping automakers and dealers reach buyers, generate leads and complete transactions. That keeps it less exposed to falling car prices than inventory-heavy new and used car sellers. But it also means the company relies on transactions for its business, as well as confidence. And right now, both of those are scarce.



<h4>Ad engine stalls</h4>



Autohome's first quarter revenue skidded 27.9% year-on-year to 1.05 billion yuan ($152 million) from 1.45 billion yuan a year earlier. Its net income dropped by an even bigger 87.6% to 44.3 million yuan from 356.6 million yuan. And ominously, the company also slipped into the red on an operating basis, reporting an operating loss of 34.4 million yuan, ending years of profitable operations on that basis.



The pressure showed up across all of the company's main businesses. Media services revenue fell 32.8% to 162.7 million yuan, as automakers tightened advertising budgets. Leads generation revenue fell 22% to 503.5 million yuan, reflecting fewer paying dealers. And online marketplace and other revenue slid 32.5% to 382.3 million yuan. Management blamed the declines on reduced spending from automakers and dealers amid shrinking sales volumes and growing losses for many.



China's auto industry is off to one of its worst starts in years in 2026. Domestic sales have dropped in each of the last seven months, including an especially sharp 21.6% drop in April, the latest month with available data. Companies have sharply reined in their spending on advertising and other services as that happens, creating a painful transition for older platforms built on trusted content and user traffic.



<h4>Rising new rivals</h4>



Autohome's squeeze is also a story about changing internet habits. In an interview last year, Li Xiang said he did not start Autohome because he simply loved cars, but rather because he saw a market opportunity. He chose autos because cars were standardized products, founded Autohome in June 2005, and quickly built it into China's top auto vertical platform.



His most striking reflection was that Autohome became too easy after around 2009 because it faced little real competition. The company was built for the era of search, forums and professional reviews, attracting consumers who were already seriously thinking about buying a car. The new world looks different.



Dongchedi, the auto information and trading platform started by TikTok owner ByteDance, grew up inside a short video and algorithm driven ecosystem. It pushes automotive content through recommendation feeds, reaching users earlier in the decision process. It is reportedly considering a Hong Kong IPO that could raise $1 billion to $1.5 billion, suggesting investors may be more interested in platforms that can connect traffic more directly to transactions.



Dongchedi has promoted cooperation models where some dealers pay based on completed sales rather than only leads, challenging the older model of simply selling traffic to dealers and automakers. Its rise poses the question of whether Autohome's usefulness to car buyers can still be monetized the same way in the face of newer and more efficient business models.



Autohome also faces a trust challenge as it moves deeper into transactions. In January, China's internet regulator criticized the company and other auto vertical platforms in a campaign against irregular auto testing content, saying some reviews could mislead consumers.



<h4>Haier takes over</h4>



Autohome's answer to the changing world around it is to become more than a media and leads platform. Management says it is transforming from an automotive information site into a comprehensive auto service ecosystem. In the first quarter, it highlighted a wide range of new initiatives, including an app upgrade, expanded premium content, AI and large language model (LLM) tools, an online car purchase pilot in Shenzhen and Xi'an, the launch of a service in Thailand and a cross-border used car export platform.



Those moves are meant to push Autohome closer to where actual money is changing hands. In particular, the moves into Thailand and exports show overseas expansion offers one path forward as Chinese automakers push into foreign markets. At the same time, used cars may offer room for platforms to add value through inspection, pricing, matching and trust building as increasingly cautious consumers in China opt for cheaper second-hand cars.



That also helps explain why Haier bought control of Autohome last year. The Chinese home appliance giant, through its Cartech unit, paid about $1.8 billion for about 43% of Autohome from longtime owner Ping An. Haier was not simply buying an aging car website. It was buying traffic, data and a consumer entry point into a broader auto service ecosystem.



But the timing is awkward. Haier is trying to help Autohome build a new engine just as the old one is running low on fuel. Autohome still had more than 80 million mobile daily active users in March, according to QuestMobile, and had about 20 billion yuan in cash and investments at the end of that month. It also agreed to pay a first-half dividend and is actively repurchasing company shares to support its stock price.



But those efforts haven't done much to soothe worried investors. Autohome's stock is down about 30% over the last year, though the shares rallied nearly 10% in the three trading days after the latest report, suggesting investors were expecting even worse.



Autohome is far from down for the count. It has plenty of financial resources and is still profitable, with limited exposure to China's price war. But the company is clearly lacking momentum. For Autohome, the question isn't whether Chinese consumers still need help choosing cars. They do. Rather, the tougher question is whether Autohome is the place they go for help in making their decision.



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Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.

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Autohome reported a 27.9% drop in Q1 revenue to 1.05 billion yuan and an 87.6% plunge in net income, marking its first operating loss. The decline stems from China's auto market slump, reduced automaker ad budgets, and intensified competition from rivals like ByteDance's Dongchedi. This performance highlights the broader impact of weak consumer demand on online commerce and advertising platforms.

Autohome Skids Amid China's Auto Slump