By Trefor Moss
SHANGHAI -- China's big tech companies are circling the auto-repair business in a bid to capture the boom in vehicle maintenance as the country's vast car fleet begins to age.
Alibaba Group Holding Ltd. and affiliates of Tencent Holdings Ltd., the two superpowers of the Chinese web, are confronting the country's thousands of mom-and-pop repair shops with the choice of joining one of their new smartphone-based networks or becoming less relevant to China's fast-growing ranks of digital consumers.
Alibaba's strategy is to link its popular Tmall e-commerce platform with a new physical chain of Tmall-branded garages to create a maintenance service that starts on a smartphone and ends in a bricks-and-mortar store. Tencent has two affiliates that are both building new garages and joining with existing ones to provide physical endpoints for online auto-part sales.
China's national car fleet quadrupled in size in the past decade to 260 million cars, according to official data, closing in fast on the U.S.'s 280 million. The average age of China's fleet is now approaching the six-year mark at which cars typically start to need significant repairs, promising a jump in demand for tire-and-oil changes and other maintenance.
The prize is a Chinese aftermarket that consulting firm Frost & Sullivan expects to be worth $524 billion in 2025.
So-called 4S dealerships -- standing for sales, service, spares and surveys -- and mostly small, independent mom-and-pop garages have dominated China's car-repair scene until now. Some international chains, notably Exxon Mobil Corp.'s Mobil 1 and Michelin, also have a significant China footprint. They, too, are turning to big tech, with Exxon forming a joint venture with Tencent earlier this year to enable online consumers to buy services at Mobil 1 garages.
The 4S stores, owned by or associated with the auto makers, service the cars they sell under a standard three-year warranty. The independent garages handle most jobs thereafter.
Small and inefficient, the independents are no match for the scale and reach of the new tech-backed networks. "The tech companies see that they can join all this up and consolidate it," said Wijaya Ng, head of consulting at Ipsos Strategy3 in Shanghai.
The U.S. auto-repair business isn't seeing tech disruption on the same scale. It is home to several large maintenance chains that would be harder to dislodge than China's mom-and-pop shops. Amazon.com Inc. sells parts online and partners with garage chains to have those parts fitted, but it hasn't announced plans to open its own franchise.
At Shibalidian Auto City, a garage hub on the outskirts of Beijing, mechanics said the tech companies were starting to squeeze the small independents.
"Business is bad," said Wang Tingsong, who opened his repair shop here 14 years ago. With younger consumers doing everything through their phones, the encroachment of big tech seems irresistible, he said. "First it was restaurants, then barbershops, then pet-grooming -- now it's the auto industry's turn" to be disrupted, he said.
Chen Bao'an, the owner of a nearby garage, said the only response is to join forces with the digital players. Just as many taxi drivers have signed up with Didi Chuxing, China's equivalent of Uber Technologies Inc., Mr. Chen said he recently joined the Tuhu car-repair network and has since expanded his customer base by a quarter.
Startup Tuhu, whose main investor is Tencent, sells parts online and arranges same-day repairs at Tuhu-branded franchise garages and partner shops like Mr. Chen's. The first mover in China's shift to smartphone-based car repairs, the startup has built a 52 million-strong user base since launching nine years ago, a company spokesman said.
Having long sold car parts online, Alibaba's Tmall and Tencent-backed JD.com are now following Tuhu's lead. Consumers can buy parts on their smartphones and reserve maintenance slots at a local garage via do-everything apps WeChat, owned by Tencent, and Alipay, which is run by Alibaba's affiliate Ant Group Co.
China has 600,000 garages, twice the number it requires, analysts say. JD.com wants to absorb the best existing shops into its network, aiming to grow to about 4,000 garages within three years, up from about 1,000 now, said Yan Qing, JD Automotive's general manager.
Mr. Qing said they aren't adding to the country's total number of garages. "It's more like an upgrade" for some existing ones, he said.
While garages aren't Alibaba's first bricks-and-mortar venture -- it runs a supermarket chain among other offline businesses -- they could soon be the largest, with thousands set to open over the next few years.
"The plan is to blanket the country," said Jim Blair, senior vice president at Carzone, a supplier of auto parts to garages and Alibaba's joint-venture partner in their new Tmall AutoCare chain.
Tmall's repair shops recently began sprouting in western Shanghai, home to a cluster of car dealerships and garages. Wang Bing, who runs a Tmall garage that opened in August, said people were surprised to see the e-commerce site's familiar cat logo on a physical building.
"They keep coming in off the street and asking what we're doing," said Mr. Wang, whose own vehicle, a red Ford F-150 pickup truck emblazoned with Tmall branding, was parked outside. "They want to know if it's real."
After investing $440,000 in the new garage, Mr. Wang is banking on the power of Tmall's brand recognition to attract consumers. In return for trading on the Tmall name, and for Tmall channeling customers to his shop, Mr. Wang will pay Alibaba roughly $22,000 for a three-year franchise and must start handing over more than 15% of his profits after six months.
That should still be worth it in a world where the process of fixing a car starts on a smartphone screen, Mr. Wang said. "It's getting harder to earn money in this business," he said. "My hope is that Tmall can make it relatively easy for me."
Raffaele Huang contributed to this article.
Write to Trefor Moss at Trefor.Moss@wsj.com