Uxin Limited

and welcome to the Yushin fourth quarter and full year 2024 earnings conference call. At this time, all participants are in listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star then zero in your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Jack Wang. Please go ahead, sir. Thank you, operator and hello everyone. by asking for a few questions? We'll start with the next question. I would now like to turn the conference over to your host, Mr. Jack Wang. Please go ahead, sir.

All right, thank you operator. And hello everyone. Welcome to the Yushin earnings conference call for the fourth quarter and full year on the call with me today we have DK, our founder and CEO, and John Lin, our CFO. DK will review business operations and company highlights, followed by John who will discuss financials and guidance. They will both be available to answer your questions during the Q&A session that follows. And before we proceed, I would like to remind you that this call may contain forward-looking statements, which are inherently subject to risks and uncertainties that may cause actual results to differ from our current expectations. For detailed discussions of the risks and uncertainties, please refer to our filings with the SEC. And now with that, I will turn the call over to our CEO, DK. Please go ahead,

sir. Thank you, Mr. President. Hello, everyone. Thank you for your long-term attention and support. I am very happy to meet with all of you investors again through the form of a phone call. In order to communicate with domestic and foreign investors, I will share the business progress of the past year with you in Chinese and English. And our thoughts and expectations for the future.

Good day, everyone. Thank you for your continued interest and support. It's a pleasure to welcome you on our earnings call today. And to better communicate with our domestic and international investors, I will be discussing our performance over the last year, as well as providing insights into our prospects in both Chinese and English.

In 2020, the price of new cars has been a huge hit in the second-hand market. The Chinese second-hand car industry continues to grow in size. In 2024, the Chinese second-hand car trade volume is 1,960 million units, which is .5% more than the .5% of the new car in the same period. The policy has also received support from various sectors. Since September, local governments have started to introduce the vehicle exchange policy. The storage of vehicles has been replaced with speed, and the second-hand car market has continued to rise.

2024 was a challenging year for the modern Chinese economy, marked by ongoing macroeconomic headwinds and an intense price war in the new car segment that weighed on the used car market. And despite these pressures, China's used car industry continued its upward trajectory. During 2024, China's used car annual transaction volume reached 19.6 million units, up .5% -over-year, outpacing the .5% growth rate of the new car market during the same period. Policy tailwinds have also played a supportive role. Beginning in September, a number of local governments introduced trade-in subsidy programs, which helped stimulate vehicle turnover that in turn stabilized and revived market demand. We are especially proud of the strong performance of our SuperStore's operations in 2024. The success further validates the scalability and replicability of our SuperStore business model. In the sessions that follow, I will outline four key milestones that reflect our progress. First, fueled by our industry-leading product and service capabilities, U-Shins' used car and retail business delivered growth that significantly outperformed the broader market. In 2024, our retail transaction volume rose from approximately 3,100 units in the first quarter to 8,500 units in the fourth quarter, achieving over 30% a year of -over-quarter growth for three consecutive quarters. And for the full year, retail transaction volume reached nearly 22,000 units, representing a -over-year increase of more than 130%.

Sales growth has been improved in all aspects, including business capabilities. Our stock stock level has been steadily improving, with the stock size at the end of 2024 about three times that of the beginning of the year. While the stock size has been rising, it has maintained a high-efficiency stock circulation efficiency of about 30 days, promoting sales and continuing to

improve. This remarkable growth was undertaken by enhanced operational execution across our business. We scaled our inventory levels in a disciplined manner, ending the year with stock roughly three times higher than at the start of 2024. At the same time, we maintained an efficient inventory turnover cycle of approximately 30 days, which supported sustained sales growth.

While the stock size has been rapidly increasing, we have achieved the highest brand popularity and customer reputation in the second-hand car industry. In the past few years, we have continued to collect real customer feedback, optimize the customer service system, and improve customer service response speed and service quality. In the fourth quarter of 2024, our NPS reached 65, which was an average of about 60 last year, which raised the highest level of the stock stock industry to a new level.

Second, as we scaled our operations, we also continued to strengthen brand equity and customer loyalty in the core markets where our super stores operate. We actively collected and analyzed customer feedback to refine our after sales service processes, improving response times and elevating service quality. As a result, our net promoter score reached 65 in the fourth quarter, up from an average of 60 in the prior year, further reinforcing our position as a trusted leader in China's east car retail landscape.

At the same time, we continued to upgrade and invest in digital engines, fully utilizing data to build the core capabilities of each business link smart drive. Recently, we have also begun to introduce large models and combine with business management to improve the efficiency of decision-making in the field of pricing, preparation, and customer service. The use of digital technology makes business management more standardized and more complex, and opens the foundation for the supervision of large-scale copy and display of the super-sales model.

At the same time, we continue to strengthen our digital capabilities, leveraging data to build intelligent, technology-driven decision-making across every aspect of our operations. Recently, we began integrating large language models into our business processes to further enhance efficiency in areas such as pricing, vehicle reconditioning, and customer acquisition. The use of digital technologies is enabling greater standardization and scalability across our platform, laying a solid foundation for the large-scale replication and expansion of our super-sales model.

Finally, it is worth mentioning that our financial situation is getting healthier, and we have successfully achieved EBITDA profit goals in the fourth quarter of 2024 after the company's single quarter adjustment. As sales increase, we gradually show the scale-based advantages of business costs. The profit level has also increased from .8% in the fourth quarter of last year to 7% in the fourth quarter of this year. With the continuous growth of new sales and the growth of business scale, we are confident that we will achieve greater profit in the future.

Lastly, our financial position continues to strengthen. In the fourth quarter of 2024, we delivered a positive adjusted EBITDA for the first time on a quarterly basis. As our sales volume grows and we are starting to achieve meaningful economies of scale, our growth margin has improved from .8% in the fourth quarter of 2023 to 7% in the same period of 2024. With additional super-stores coming online and our business scale expanding, we are confident in our ability to deliver sustainable and growing profitability in the quarters and years ahead. Looking ahead to 2025, we will continue to build on the foundation of our large-scale super-store model, executing a disciplined regional expansion strategy to further scale our operations and drive profitability.

First,

we aim to unlock additional capacity at our existing super-stores and increase our market share in their respective cities. Currently, both our CN and Hefei super-stores are operating at less than 50% of their full capacity. In 2025, we plan to continue ramping up inventory at these locations while maintaining efficient thermal wear cycles to support sustainable retail volume.

We are also working with the local government of the two cities of Wuhan and Zhengzhou to reach a contract for the construction of our super-stores. Both cities of Wuhan and Zhengzhou have over 12 million people and 5 million cars. This is the ideal area for expanding our super-stores. Wuhan Super-stores will be investing in the city's operations in February 2025. Zhengzhou Super-stores will open in the second half of 2025. The second,

we plan to open between two to four new super-stores in key regional markets while strengthening our integrated online-offline retail ecosystem. As previously disclosed, Yuxin has entered into partnerships with the local governments in Wuhan and Zhengzhou to establish new super-store operations. Both cities have populations exceeding 12 million and vehicle ownership bases of over 5 million units, representing highly ideal markets for expansion. Our Wuhan Super-store began trial operations in February 2025, and our Zhengzhou Super-store is on track to open in the second half of the year. In parallel, we are actively identifying and preparing additional locations to support new store launches in the coming years.

Third,

for our full-year operational targets in 2025, we aim to achieve another year of over 100% growth in retail transaction volume and to deliver our first full-year positive adjusted EBITDA. As we pursue the expansion, we remain committed to maintaining the long-term health of our financial position.

As the leading company in the Chinese car industry, we will continue to lead the car industry in the transformation and upgrade of the car industry through advanced modern retail experience, professional car manufacturing capabilities, and efficient digital operating system. We will do our best to provide the best car products and services to our customers, and to bring long-term returns to all shareholders who have experienced the storm together with the company.

Now, China's car ownership has surpassed 350 million vehicles. As an increasing number of these vehicles enter the secondary market, the trillion RMB used per sector is expected to maintain strong growth momentum over the next 5 to 10 years. The sector is evolving towards a new phase of growth defined by brand-oriented, large-scale, and standardized development. As a pioneer and leader in China's used car industry, Yuxin is well positioned to lead this transformation. Through our modernized retail experience, professional vehicle reconditioning capabilities, and a highly efficient data-driven operating model, we are setting new benchmarks for the sector's advancement. We remain fully committed to delivering the best used car products and services to our customers, and to generate long-term value for our shareholders, many of whom have supported us through every phase of our journey.

That's all for today. Next, our CFO John will show you the financial situation. And with

that, I'd like to turn the call over to our CFO to walk you through the financial results. John, please go ahead.

Thank you, DK. Hello, everyone. I'm very happy to have the opportunity to share with you today the financial situation

of the company. Thank you, DK. Hello, everyone. I will now share an update on our financial performance. We've delivered another quarter of strong results in the fourth quarter of 2024. Retail transaction volume reached 8,554 units, representing a 42% increase quarter over quarter and a 178% increase year over year, significantly up-forming the overall China-used car market, which recorded a significant growth. This marks the third consecutive quarter in which our retail volume has grown by more than 100% year over year.

The total retail revenue of this quarter is 5.53 billion RMB, which is a 25% increase in the year over year and 73% increase in the year over year. The average sales price of retail vehicles has dropped from 10.4 million yuan in the same period last year to 6.5 million yuan this quarter. The sales of large-scale growth has reduced the impact of the car price on the revenue level. Our current car inventory meets the needs of most consumers. The average sales price of single vehicles is at a relatively reasonable level. It is expected that the sales price will remain stable.

Total retail revenue for the quarter was 553 million RMB, up 25% sequentially and 73% year over year. Our average selling price, or ASP, for retail vehicles decreased from 104,000 RMB in the same quarter last year to 65,000 RMB this quarter, primarily due to the broader shift in vehicle makes. However, the substantial increase in sales volume more than offset the impact of lower ASP on overall revenue. Our current inventory is well positioned to meet the needs of a broad base of consumers, and we expect ASP to remain stable going forward.

In terms of car sales, the sales of four-level sales are 885 units, the return ratio is 15%, and the return ratio is 31%. The total sales of wholesale vehicles is 25.5 million yuan. The total total sales of retail vehicles and wholesale vehicles are 5.97 billion RMB, the return ratio is 20%, and the return ratio is 45%.

The total sales of retail vehicles and wholesale vehicles are 15% sequentially decline and 31% year over year decline. Hosell revenue for the quarter was 25.5 million RMB. Combining retail and wholesale operations, total revenue for the fourth quarter was 597 million RMB, representing a 20% sequentially increase and a 45% year over year increase.

The profit margin for this quarter is 7%, which is the average of last quarter. The .8% increase of last year's same quarter increased 2.2%. Our profit margin for the last two quarters is relatively stable. As the market economy warms up and the service productivity increases, we expect to see a relatively larger profit margin increase.

Our gross margin for the fourth quarter was 7%, remaining stable compared to the previous quarter and improving by .2% from .8% in the same period last year. Over the past two quarters, we have maintained a gross margin at a relatively stable level. Looking ahead with a recovering market environment and increasing penetration of value-added services, we see meaningful upside potential for further gross margin expansion.

We have also continued to strictly manage the cost of the service. This is the first time EBITDA has been corrected after the adjustment. Last year, we lost 43.8 million RMB.

The gross margin for the fourth quarter compared to an adjusted EBITDA loss of 43.8 million RMB in the same period last year.

The gross margin for the fourth quarter compared to an adjusted EBITDA loss of 43.8 million RMB in the same period last year. The gross margin for the fourth quarter compared to an adjusted EBITDA loss of 43.8 million RMB in the same period last year. Regarding the specific data for the whole year, we have leaked detailed information in the report and annual report. Here I will no longer talk about it.

The total revenue reached 1.814 billion RMB, an increase of 30% -over-year. Our full-year adjusted EBITDA loss narrowed significantly to 80.8 million RMB, an improvement of 96.3 million RMB compared to 2023, representing a -over-year improvement of nearly 54%. We have disclosed additional details regarding our full-year financial performance in our recently published fourth quarter and annual results, so I will not repeat all the figures here.

After a thorough evaluation, we believe that the company's financial situation for the next year and longer will meet the needs of the management. The audit report has removed significant doubts about the continued management.

We believe that the company's financial situation for the next year and longer will meet the needs of the management. The audit report has removed significant doubts about the continued management. From our audit opinion. Turning to our outlook for the first quarter of 2025. While the first quarter is traditionally a systemally soft period for the used car industry due to Chinese New Year holiday, we expect retail transaction volume to be between 7,400 and 7,500 units, representing more than 140% -over-year growth. This will mark our fourth consecutive quarter of -over-year retail volume growth exceeding 100%. Total revenue for the first quarter is expected to be between 490 million RMB and 500 million RMB.

I will repeat the results of the -over-year survey. In 2025, we plan to invest 24 new retail factories. With the continuous release of the existing two retail factories and the gradual fall of new retail factories, we are confident that we will maintain a total sales volume of over 100% in 2025 and achieve a profit of 1Bit

per year. Lastly, to reiterate DK's earlier comments on our full-year outlook. In 2025, we plan to open 2-4 new super stores. With the continued ramp-up of our existing two locations and the launch of new stores, we are confident in maintaining over 100% -over-year retail volume growth for the full year and achieving positive full-year adjusted EBITDA. That concludes our prepared remarks for today. Operator, we are now ready to take questions.

You may press star and then two if you wish to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handsets before pressing the star keys. Again, if you would like to ask a question, please press star and then one now. The first question that we have comes from Fei Dai of TF Securities. Please go ahead.

Hello, can you hear me?

Yes, no problem. Okay.

The company's cash balance has remained relatively low. However, we noticed that in your first quarter results, your auditor removed their substantial doubt regarding your ability to continue as a growing concern. Could you please update us on the current cash position and whether it is sufficient to support future business development, including the investment in new super stores? Thank you.

Okay, John, I will answer this question. In the past year, we have invested as much as possible in the improvement of the stock market. Our capital balance has indeed been at a relatively low level in the fourth quarter. As the stock market increases, the sales of the company also increases rapidly. Our profit level also continues to improve. Investors are becoming more and more confident in the company and are also supporting the company and investing in the expansion and development of the company's business. According to the term sheet that we signed in 2024, we have officially signed a $27.8 million financing agreement with investors in March 2025. The $19 million of the transaction has been completed. The rest of the transaction is also in normal progress. The company's current level is called a significant improvement last year. Therefore, the auditors have also reviewed the company's future management plans and various company capital arrangements. They believe that the company's capital can support future business development. Therefore, this year's annual report also shows that the company's continued management is no longer doubtful. Hi,

this is John and I'll take this question. Over the past year, we prioritized allocating our capital to expanding inventory levels, which resulted in maintaining a relatively low cash balance. As our inventory expanded, our sales volume grew rapidly, our profitability improved, and the investor confidence in using strengthened significantly. This led to further investment to support our business expansion. Based on the term sheet we signed in 2024, we entered into a formal financing agreement with investors in March 2025 for an aggregate amount of $27.8 million. Of this amount, $19 million has already been funded with the remainder in the process of being delivered. As a result, our current cash position has improved significantly compared to the end of last year. Following a careful review of our operational plans and funding arrangements, our auditors concluded that our financial position is sufficient to support future operations and no longer expressed substantial doubt regarding our ability to continue as a growing concern.

As for our new sales site, our capital investment is invested at a pace. At the initial stage, we have to invest in equipment for the preparation of the factory. The capital for the car and operation will gradually increase as the inventory scale increases. In addition to capital, we will also use other funds to supplement our capital. For example, local governments will directly invest to support our local business. In Wuhan and Zhengzhou, both cities are in this mode. In addition, we also use bank and financial institutions to store and deposit funds to reduce the use of capital. Overall, the scale and pace of the use of a new -of-charge capital is highly controllable.

Now regarding new superstore investments, the capital expenditures will be phased. Aside from the initial set-up costs for reconditioning facilities, vehicle purchases and operating expenses are gradually deployed as inventory scales. In addition to using our own cash, we also leverage other funding sources. For example, local governments provide direct investment support for our operations in certain cities, such as Wuhan and Zhengzhou. Furthermore, we utilize inventory financing services from banks and the financial institutions to reduce our own capital commitments for vehicle purchases. Overall, the amount and pace of our capital deployment for new superstores are highly manageable and under control. So to summarize my answer, our financial position is steadily progressing on a solid trajectory with disciplined cash management and strong investor support. Our current cash reserves are sufficient to fund the growth of our existing superstores and the rollout of new superstores throughout 2025. That's all our answer to your first question.

Thank you. My second question is, the company's stock price has experienced a notable increase over the past year. Could management share your views on the current stock performance? Thank you.

I will answer this question. First of all, I would like to thank you for your attention to the company's stock price. I think the growth of the stock price has been to a certain extent reflected the investors' attention to the second-hand car industry, the recognition of the business model and the confidence in the future development of the car.

First of all,

China has the world's first .5-liter engine. The second-hand car market is already a track with a population of 10 billion yuan. Compared to the developed countries, the exchange rate of new cars and second-hand cars is 1 to 3, while China is only 1 to 0.6. China's second-hand car market still has more than four times the growth. U-Shin is the only company in China that is currently focused on second-hand car sales. I believe that as long as investors are concerned about the second-hand car industry in China, they will definitely pay attention to U-Shin.

China is currently the only company in the world that is focused on second-hand car sales. China is currently the only company in the world that is currently focused on second-hand car sales. We believe that as long as investors are paying attention to China's second-hand car industry, U-Shin will naturally be a key focus. The second among used car retailers in China, our large-scale superstore model, is truly differentiated by combining a modern retail experience, advanced vehicle reconditioning capabilities, and a highly digitized management system, we are reshaping the traditional used car business. Our model has been strongly endorsed by customers, as reflected in our industry-leading net promoter score. Our Xi'an and Hefei superstores have already become leading destinations for used car purchases in their respective regions.

Our third,

we expect our businesses to sustain high growth over the coming years. In 2025, we plan to open two to four new superstores, and we are actively advancing the development of additional sites in other regions. As each superstore matures operationally, we expect to remain on a trajectory of strong and accelerating growth for the foreseeable future. Our ultimate goal is to create long-term value for our shareholders. At this stage, we are fully focused on executing our business strategy and delivering operational excellence. At the same time, we are committed to keeping investors informed about our business progress in a timely manner. We sincerely appreciate your continued attention and support.

Okay, that's my answer. Thank you.

And that's our answer to your question.

Thank you. At this stage, there are no further questions on the conference call. I will now hand over to Jack for any pre-written questions.

We actually have another question from Gary. Gary's voice acted with what is our research who has sent over his questions beforehand. So we'll take this opportunity to answer that as well. His question is, given the recent trade tensions between China and the U.S., how does management view the outlook for China's each car market in 2025? Are there going to be any major challenges anticipated? Okay,

thank you for your question. The trade tensions between China and the U.S. are very strong.

This is a decay and I will answer this question. While trade tensions between China and the U.S. may have some impact on the new car industry, we believe there will be minimal direct impact on China's used car market. Our business is primarily domestic, operating within China's internal circulation economy, and at this time we have not observed any direct effects.

In order to deal with the intensification of the conflict between China and the U.S. trade, the Chinese government has taken multiple measures to stimulate internal demand and expand the policy of resupply. The 2025 subsidy will be doubled to 300 billion RMB, covering several areas of car power supply. The business department also specifically expressed support for the car industry to organize the organization to expand car traffic consumption reform. Overall, we

remain relatively optimistic about the outlook for China's used car market in 2025. In response to escalating trade frictions, the Chinese government has introduced multiple measures to stimulate domestic demand. These include expanding the trade-in subsidy program with total subsidies across sectors such as automotive and home appliances, doubling to 300 million RMB in 2025. The Ministry of Commerce has also reiterated its support for the used car industry, announcing initiatives to reform auto circulation consumption and promote efficient used car transactions and broader trade. In addition, the Chinese government has also introduced a new policy to increase the use of car power supply in the automotive aftermarket. As more replacement activity occurs, the supply of high-quality used vehicles is expected to increase further accelerating transaction

volumes.

On the other hand, if trade tensions persist and water economic winds materialize, we believe more consumers will shift to focus more on value for money, leading to increased demand for used vehicles.

As for the advantages, with the release of existing car manufacturers and the exhibition of new car manufacturers, sales and sales remain at 100% or more. No matter how the external environment changes, our development speed will continue to exceed the development speed of the entire industry. We will also continue to pay attention to the market's movements and adjust strategies to deal with external environmental changes to ensure the long-term and stable development

of the company. For using with the ongoing ramp-up of our existing super stores and the launch of new locations, we expect to maintain over 100% growth in our retail sales volume in the coming year. Regardless of external market fluctuations, we believe that our growth trajectory will continue to significantly outpace that of the industry average in the years ahead. We will also continue to monitor market dynamics closely and adjust our strategies as needed to ensure that our company is sustainable long-term development. And that's our answer to the question. Yeah, that's our answer to the question. Operator, we can move on.

Thank you, sir. At this stage, there are no further questions on the conference call. Would you like to make any closing comments?

Thank you. Thank you all for joining today's call and for your continued support in using. We look forward to speaking to you again soon in the future.

Thank you, everyone.

Thank you. Ladies and gentlemen, that then concludes today's conference. Thank you for joining us. You may now disconnect your lines.