Autohome Inc.

Ladies and gentlemen, thank you for standing by for Auto Home's fourth quarter and full year 2021 earnings conference call. At this time, all participants are in a listen-only mode. A questions and answer session will follow the formal presentation. As a reminder, this conference call is being recorded. If you have any objections, you may disconnect at this time. It is now my pleasure to introduce your host, Sterling Sohn. Auto Home's IR Director. Mr. Song, please go ahead.

Thank you, Venice. Hello, everyone, and welcome to Auto Home's fourth quarter and full year 2021 earnings conference call. Earlier today, Auto Home distributed its earnings press release, and you may find a copy on the company's website at www.autohome.com.cn. On today's call, we have Chairman and Chief Executive Officer, Ms. Xuan Long, Co-President, Ms. Haifeng Sha, Chief Technology Officer, Ms. Bi Boxiang, Vice President, Ms. Zhou You, as well as Finance Director, Ms. Hong Jiang. After our prepared remarks, our management team will be available to answer all your questions. Before we begin, please know that the discussion today will contain further losing statements made under the Safe Harbor Provision of the U.S. Private Securities Litigation Reform Act of 1995. Fuber-Lufa statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include but are not limited to those outlined in our public filings with the Securities and Exchange Commission. Autohome doesn't undertake any obligation to update any forevolution statements except as required under applicable laws. The earnings press release in this call also include discussions of certain unaudited non-GAAP financial measures. Our press release contains a reconciliation of the non-GAAP measures to the most directly comparable GAAP measures and is available on Autohome's website. As a reminder, this conference is being recorded In addition, a live and archived webcast of this earnings conference call will also be available on Autohome's IR website. Next, I will now turn the call over to Autohome's chairman and CEO, Mr. Long.

Mr. Long, please go ahead. Thank you, everyone.

Hello, everyone, and thank you for joining us today in the earnings call.

In 2021, even though the red-light environment is full of challenges, the car industry is still stable. The company is working together to stick to its original intention, actively promoting the company's transformation and upgrade, and steadily moving forward. For nine consecutive years, it has been regarded as a Chinese Internet company. We are ranked 20th in the country, with a total revenue of 72.4 billion yuan per year. Among them, the income of new business is 11.6%, 2021 was another annual year for all of us. Despite the challenging microenvironment, we are incredibly proud of auto homes

resilient performance throughout the whole year, as well as its ongoing efforts to transform and upgrade its business. We are also proud of the continued recognition we receive from both the industry and our customers, including being listed as one of China's top 100 internet companies for the ninth consecutive year, ranking 20th in 2021. We delivered total revenue of RMB 7.24 billion for 2021, of which the contribution from new business rose from 23.2% in 2020 to 30.9% of total revenue in 2021, with new business revenue growing 11.6% year-over-year. Our adjusted net profit for the year was RMB 2.58 billion, with our adjusted net margin maintaining the competitively high level of 35.7%.

In 2021, we realized two major milestones in the history of the automotive industry. In mid-March, the automotive industry successfully set up a new business in Hong Kong. It greatly improved the capital market in Hong Kong. On the opening day of the investors' opening day in September, we launched an ecological strategy to fully integrate safe vehicle ecology and fully serve C3 consumers. B-Line main airport, and automotive ecosystem participants, to build the only all-electric vehicle ecosystem platform that I have. In addition, while the company maintains a annual net profit of 20% of the stock market policy, it has launched a $200 million stock repurchase plan to better repay long-term support from major shareholders. This also shows the firm confidence that the company will upgrade its strategy and develop its prospects in the future.

2021 witnessed two significant milestones we achieved. In middle March, Autohome successfully was listed on Hong Kong Stock Exchange. We are delighted to have reached this milestone and to have embarked on this new journey to increase Autohome's exposure to Hong Kong's capital market. During our investor day in September, we unveiled our ecosystem strategy to bolster Autohome's integration with Ping An's auto ecosystem. making our unique suite of full-cycle auto ecosystem services as well as our leading-edge platform accessible to an even broader base of C and customers, E and OEM customers, and other partners in the auto ecosystem. In addition to maintaining our annual dividend payout of around 20% net income for the year, we launched a US dollar 200 million share repurchase program to reward shareholders for their long-term support which represented our commitment to a strategic upgrade and confidence in our future performance.

In the case of C-DAN, we focus on the layout of urbanization and young people. By diversifying the content of high-quality content, we can expand the scope of use. In December 2021, the mobile unit of Qizhezijia created a new record. The same growth is 11.4%, further consolidating the leadership position of the industry. We also reached a strategic agreement on the high-quality map. The multi-stage application of the layout of modernized traffic Through deepening cooperation with new people, the revenue from new people's car brands has increased by more than half in the same year. The speed of sales has not only achieved greater breakthroughs, but also more data products have been used by sales customers. In 2021, the average number of products used by each merchant increased by 18% in the same year. In addition, through the integration of day-to-day parking, the overall combination and auction service of the car brand

The challenges we faced over the past year, we struggled to seek new opportunities and tap into new arenas while sustaining robust momentum in our traditional business and preserving our preeminent position in the auto media vertical. We've increasingly explored new business areas to build a solid foundation for our second growth trajectory. We remain focused on expanding video content as well as other engaging content appealing to younger users. With a growing, diversified, and high-quality content library, we continue to expand our user base. In December 2021, Autohome recorded an all-time high mobile DAU of 11.4% year-over-year, fully cementing our leadership in the industry. Moreover, we formed a strategic alliance with EMAP to expand the use cases that would benefit from our traffic across the ecosystem. In terms of our new business, our ongoing efforts to engage and collaborate with NEV automakers led to increasing revenue from NEV brands, which more than doubled on a year-over-year basis. Our digital dealer solution also continues to achieve breakthroughs in the data product adoption rate by dealer customers, evidenced by an increase of 18% year-over-year in the average number of data products adopted by each dealer. Additionally, leveraging our integration with TTP via our matching and auction capability, we have reinforced our position in the used car market, contributing to approximately 17% of all used passenger vehicle trades in China.

It is the primary platform for users to watch cars, buy cars and use cars. It uses a high-end user base of more than RMB 5,000, which is 37%, which is far above the average level of the industry. High-consumption users and extremely valuable traffic make the company a leading leader in the automotive market. At the same time, we hold a high-quality map, Next, I will provide more details on several areas. With regards to traffic, according to PressMobile, Autohome's mobile DAU reached 46.9 million in December 2021, with a year-over-year increase of 11.4%.

surpassing the total DAU of the second and third largest players in the market combined. In addition, according to Jigwang Aurora's data, as of the end of Q4 2021, Autohome's APV penetration rate kept its number one position in the auto media vertical and maintained its top-of-mind status as a preferred auto platform for meeting user needs for rebuilding, buying, and using cars. Notably, the proportion of high-end users with smartphones worth over RMB 5,000 yuan is 37%, far beyond the industry average. This user base with its valuable traffic and strong purchasing power has helped the company to generate the most revenue within the auto media vertical. Meanwhile, building our alliance with EMAP will create new selections and in-store visit patterns as well as induced higher traffic from EMAP's navigation services, so further laying a solid foundation for sustainable growth.

In terms of content, we vigorously develop innovative business such as video, live broadcast, and new energy community, strengthen product drive, repeat content advantages, and gather resources to create paid content and IP, attract users to participate in interaction, strengthen user activity, improve user connectivity,

regarding content, we are actively developing innovative content offerings including short video, live streaming, and content for AEB-centric online community to enhance our product power and reshape our content strength. We also prioritized our resources to continuously create blockbuster content and IP to increase user engagement and user stiffness, ultimately becoming the go-to auto-vertical video platform, the largest online auto-vertical live streaming platform, as well as the largest online NEV-centric vertical media.

The world's largest and most famous automotive IP, 818 Global Automotive Festival, has been successfully held for three consecutive years. It is the largest annual automotive IP and the first IP of the car industry. The 818 Global Automotive Festival of 2021 covers more than 500 million people. The number of interactions with users on the Taiwan network exceeds 90 million. The total exposure of the project exceeds 15.5 billion. Through online marketing,

Auto Home pioneered the August 18th Super Auto Show, now a well-known auto IP, which has successfully run for three consecutive years and attracted countrywide attention. During 2021's August 18th Super Auto Show, we gathered more than 500 million visits. drove over 90 million interactions, and generated over 15.5 billion in search results. This event truly demonstrated our ability to connect users, OEMs, and dealers, as well as our influence on the industry as we aesthetically promote the industry's development.

In the 11th month of this year's Guangzhou Motor Show, seven hand-made motor shows, a brand new live broadcast, and an online exhibition It used to be a physical mode. Internet celebrity live broadcast plus salesman live broadcast 500 times a day. Multi-screen viewing, energy consumption and interaction are the highest. The effect of Internet celebrity interaction is significant. Salesman conversion has been greatly improved. The total number of views is more than 700 million. In addition, the company has also held a性能嘉年华. Provide opportunities for young people to communicate with each other. Create a competition for young people. Improved the quality in the next generation. During the November 2021 Guangzhou Auto Show, Auto Home innovated live streaming scenes with immersive online shopping experience.

KOL plus dealer live streaming reached on average 500 live streams per day. With the increase in time spent by users on multi-screen reading and elevated KOL's interaction rate, the results were apparent with dealers' conversion rates greatly improved and total views reaching 700 million. In addition to the Guangzhou Auto Show, Auto Home held a PowerFest 2021 to provide networking opportunities for auto fans and the youngsters in a vision competition to widen Auto Home's brand awareness among the younger generation. The exposure for both these events exceeded 100 million. Furthermore, during the year, we created the largest online auto owners manual library, motorcycle model library, and auto modification library, which along with our 3D modification tools enhanced the user experience.

The design of this traditional flagship business is still stable, firmly maintaining the leading position of the first in the media segment, and through innovation, it has built a RRS model from resource sales to providing a unified solution, which greatly reduces the impact of traditional business on performance for the expansion of innovative business for car sales, marketing and energy. In terms of clue business, we see that by upgrading clue products, and diversified product positioning effectively meet the needs of different retailers and customers. The demand for car dealers is far exceeding expectations. The demand for high-end products reached 88%. At the same time, the quality of car dealership business has also been greatly improved. According to the analysis report, the number of car dealerships selling car dealerships in 2011 is leading in the industry.

Since the start of 2021, chip shortage and raw material price hikes have greatly affected the auto industry and caused reductions in automakers' marketing budget. Nevertheless, Auto Home's traditional business remains stable, firmly maintaining its leading position as the number one in the auto media vertical. Furthermore, we also launched this year an innovative R2S resource-to-solution model empowering OEMs with an integrated one-stop solution. The expansion of our new business effectively reduced the downward pressure on our traditional business amid the challenging environment. Regarding our lease generation business, we have efficiently fulfilled our dealer customers' needs through product upgrades and differentiation. The annual lease Subscription package contract renewal process was better than its package, with an 88% renewal rate of our high-end version, including our premium and tech versions. According to Analysis China in 2021, Auto Home is an industry leader in terms of both sales lease volume and lease connection rates.

In the past 21 years, we have used AI and 3D technology to develop and use it to accelerate and assist in the digital transformation of the main machine field, to help it improve its digitalization level, and to ensure that new digital products can be used and operated independently from brands, and to reduce the demand for VR devices. In addition, digital salesmen have also invested in new products such as C-Lan, Smart Self-Defense, to help salesmen realize

We continue to work tirelessly to empower automakers' digital transformation through our AI and 3D applications. We have launched a series of new data products such as private domain operations and VI sales packages. Regarding dealer digitalization, we have launched SLAM and SmartQC to help dealers manage their performance visually. In 2021, the average number of digital products purchased per dealer customer has increased by 18% year-over-year to 3.59%. In the face of the rapid development of new labor, we have applied for e-commerce new products.

to provide the overall solution of the effect from the brand to the effect of the new energy manufacturer, to assist the new energy vehicle to quickly occupy the new market, to expand the sales, and to improve the collection. In 2021, Zhijiayu established a partnership with 22 mainstream new energy brands. The annual income of new energy brands increased by 128% in the same ratio, and reached 60% in the same ratio in the same ratio in the same ratio in the same ratio In the future, we will continue to expand our new energy business. Through media promotion, channel innovation, user operation, etc., we will build the largest number of new energy payment platforms and the largest number of new energy display and purchase platforms.

Aligned with the rapid growth in the EV market, we have upgraded our EV commerce service to provide an all-round solution to EV companies from branding to advertisement tracking. Our NEV commerce service helps them build brand visibility and grow sales. Autohome has collaborated with 22 mainstream NEV brands in 2021, with revenue generated from the NEV business increasing by 128% year over year, capturing 60% of market share in the media vertical among mainstream emerging NEV players. In the future, we will continue to expand our AEV business through content upgrades, innovative channels, and user operations to build the largest online media vertical and trading platform for AEV.

In terms of second-hand vehicles, the CEO of Qisezijia, Shao Haifeng, has led the Tiantian Motor Vehicle Corporation. Through the deep integration of Tiantian Motor Vehicle, Qisezijia has further expanded the layout of second-hand vehicle business. It opens up the industrial chain of information, operation, and trade, and develops rapidly with a platform-based strategy of green capital. The business status of S&I continues to improve. In terms of service users and customers, we on the one hand stack up second-hand car and car parts products, expand the data source, and increase the initial risk rate to 98%, and increase the risk rate to 80%, reporting that the industry is low in the risk area, and effectively helping users to maintain a On the other hand, we will effectively improve the limited capacity of second-hand cars through smart delivery products to help second-hand car manufacturers improve the efficiency of sales. In the future, the second-hand car industry will continue to accelerate the restoration of the entire industrial chain, build a second-hand car flow, and fully digitalize the system. The second-hand car business will be fully digitalized, and the product will be standardized, and the process will be transparent.

For our used car business, Ms. Haifeng Sha, president of Autohome, has become the chairman of TTP. Autohome has further expanded our business to deepen its synergy with TTP, creating an integrated platform, connecting information, operations, and trades. The used car business is driving forward with an asset-light and platform-focused strategy. As a result, TTP's financial performance is consistently improving. For used car buyers and sellers, we've developed a tremendous database of car usage history. We are able to retrieve 98% coverage in car insurance history and 80% in maintenance history, which also makes us the industry leader Therefore, we are able to efficiently resolve buyers' concerns during used car purchase. In addition, smart invitation products enable dealers to improve the quality of their lease and hence lead to improved transaction efficiency. Going forward, Autohome's used car business will continue to pursue our comprehensive sector strategy to digitize digitalizing used car information, and dealer operating processes. We aim to consolidate our leadership as the largest online used car trading platform in China, providing standardized, modernized, and transparent processes.

In terms of peace coordination, Qizhe Zhijia Car Ecosystem is fully integrated into Ping'an Group's car ecosystem, deepening the advantages of Ping'an and Zhijia, and building a co-contract with my friends. will fully integrate into the Ping An auto ecosystem and leverage Ping An's advantages

to realize our unique presence in the auto industry. With a wider as well as deeper scope of collaboration, we will leverage Ping An's large offline team, which will provide us with distinct advantages compared with other internet companies. By connecting with Ping An's massive high-value customer base and over 140 million car owners, Auto Home's partnership with Ping An aims to create the industry's First Complete Automotive Ecosystem.

2022 is a year based on challenges. Looking forward to the future, we will continue to uphold the values of our family, vigorously promote strategic transformation, continue to provide medical products and services to users and customers, maintain long-term sustainable development, and carry out strategic investment in the new field to promote strategic upgrade, 2022 is likely to bring opportunities and also host new challenges. Looking ahead, as we continue to uphold our value proposition with vigorous promotion of our ecosystem strategic transformation,

We are determined to pursue our mission to empower our customers with top-notch products and services, aiming to achieve long-term sustainable growth. At the same time, we promote the comprehensive implementation of strategic upgrades through strategic investment in new business areas, bringing Autohome back on track to fast growth. We are completely confident of the long-term development of China's of the rural auto market as well as auto homes are going to grow in the future. With that, I will now turn the call over to Ms. Hong Jiang, our finance director, for a closer look at our financial results for the first quarter and the full year 2021.

Thank you, Mr. Long. Now let me walk you through the key financials for the first quarter and the full year 2021. Please note that, as with prior calls, I will reference RMB only in my discussion today unless otherwise stated. Net revenues for the first quarter were $1.69 billion. For a detailed breakdown, media services revenue came in at $373 million. Leads generation services revenue was $778 million. And online marketplace and others revenues were $543 million. Moving on to cost, cost of revenues were $262 million compared to $268 million in the fourth quarter of 2020. Gross margin was 85% in the fourth quarter compared to 89% in the same period of 2020. Turning to operating expenses, S&M expenses in the fourth quarter were $803 million compared to $871 million a year ago. The decrease was primarily due to the decrease in promotional spending and continuous budget control. Product and development expenses was $395 million compared to 397 million in the fourth quarter of 2020. Finally, GMA expenses were 128 million compared to 71 million in the fourth quarter of 2020. The increase was primarily due to the consolidation of TTP. Overall, we delivered operating profit of 177 million for the fourth quarter, compared with 947 million in the corresponding period of 2020. Adjusted line income attributable to Auto Home Inc. was $470 million for the fourth quarter compared to $1,192 million in the corresponding period of 2020. Non-GAAP basic and undiluted earnings per share for the fourth quarter was $0.93 and $0.93 respectively compared to $2.49 and $2.48 respectively in the corresponding period of 2020. Nungap's basic and diluted earnings per ADS for the fourth quarter was 3.71 and 3.71, respectively, compared to 9.95 and 9.91, respectively, in the preforming period of 2020. Now let me turn to a short summary of our 2021 full-year results. Total revenues were $7.24 billion. Of that, media services revenue was $2.01 billion. These generation services revenues were $2.99 billion, and the online marketplace and others revenues increased by 11.6% year-over-year to $2.24 billion, primarily attributable to the consolidation of TTP. In addition, we delivered and adjusted the net income attributable to Auto Home Inc. of $2.58 billion, which excluded certain non-cash charges or non-operating items As of December 31st, 2021, our balance sheet remained very strong with cash, cash equivalents, and a short-term investment of 20.73 billion. We generated operating cash flow of 3.52 billion in 2021. On November 18th, 2021, our board of directors has authorized a share repurchase program in which we may repurchase up to 200 million US dollars of autonomous ADS for a period not to exceed 12 months thereafter. As of February 22, 2022, we had repurchased 432,653 ADS for a total cost of approximately $12.7 million. I'm also pleased to announce that our board has approved a cash dividend of approximately US$0.53 per ADS or US$0.1325 per ordinary share. Following this dividend payment, we still have ample capital resources to invest in our business and further strengthen our leadership position going forward. With that, we are ready to take your questions. Operator, please open the line for Q&A.

We will now begin the questions and answer session. Audio participants with questions to pose, please press 01 on your telephone keypad and you will be placed in the queue. To cancel the queue, please press 02. Once again, 01 on your telephone keypad now. Our first question, Mr. Thomas

Thank you, management, for taking my question. I have a question on our view on the auto industry outlook in the coming quarters and the competitive landscape. 我翻譯一下,我的問題就是我們對汽車行業未來幾個季度的一個展望,還有就是一個對競爭環境的看法,謝謝。

Okay, let me answer this question. I am a farmer from a family of seven. Regarding this industry, from what we have seen so far, the relevant data of the Youth Association, because the corresponding data refers to the sales volume, is relatively accurate. Regarding 2022, it is estimated that the sales volume of the whole Chinese market, is about 5%. But the growth of the new energy car in the middle is very large. It is estimated to be more than 70%. In other words, the overall sales of the new energy car will exceed 5 million taels. Well, thank you very much. I'm glad to take the question. I'm the chairman and the CEO. My name is Long Quan. Well, actually, according to the statistics from the Passenger Car Association that made in January of 22,

Actually, in 2022, the Chinese auto market, actually, the growth of the whole market on the retail side would be about 5 percent. However, for the new electric vehicle, the accumulated sales would be more than 5.5 million, which the market penetration rate can be 25 percent. The gross rate of the sales The NEV in China market would be around 70%.

So I just talked about the market situation. Secondly, I also talked about our own and domestic situation. Actually, I have already told you in advance that our business is divided into two parts. One is traditional business and the other is new business. So in terms of traditional business, Now, let me talk about Auto Home. We have two pieces of business.

One is traditional business. The second would be the new business. Now let's focus on the traditional business. Actually, with the recovery of the Chinese auto market, we believe our traditional business would resume back to the normal track. Actually, last year, the Chinese auto market was quite down. So that's why it dragged down our traditional business. However, having said that, I still want to say we continue to be number one in the auto vertical media market.

In terms of new businesses, there are three main ones. The first one is our digitalized product. This one will contribute more income in the second year. This is one. The other one is about our new people. As for the new people car, we are cooperating with all the new people brands. Then this will also contribute more income to the family in 2022. Then the third piece of this is about this second-hand car. So I just said it. Our president here, this Shao Yifeng, has been the chairman of this Tian Tian拍. Then in this year, that is, in 2022, Now let's focus on the new business. We have three pillar industry for the new business. One is the digitalized product. Actually, we believe in 2022, the revenue of this piece would greatly increase.

in terms of the contribution to the total revenue. The second piece would be the NUV. Actually, we had a collaboration with all NUV brands in China, and this will continue to grow and to contribute to the total revenue. And the third piece of mess would be used car. As you know, Mr. Shaohai Song was named as the chairman of the TTP, and he would defend the strategic collaboration of TTP with Auto Home. which would also drive up the revenue.

Thank you. Our next question is from HSEC. Please go ahead.

Good evening. Thank you for accepting my question. I have two questions. The first question is, Let me translate the questions myself. Thank you, management, for taking my questions, two questions. First is about 2022, your view on the used car market outlook. Second of all is what is our used car business goal or priority in 2022? Is it about profitability or is it about top line? Thank you. 这个问题我来回答一下。

In 2022, China's second-hand car will continue to maintain the trend of growth and development in 2021. In 2021, its second-hand car trading volume will increase by about 2 billion. And then we think that in 2022, It will continue to remain at about 20. This is a situation of the overall market. The second is that in this increase ratio, the current market is still small. There is no head. Thank you for the question.

As for the used car market, we believe it will continue to grow. Actually, in 2022, it will keep 20% of market growth. However, the used car market has a few features, which is quite distinctive. For example, the first feature is it is a quite segmented market. A lot of players and stakeholders in this market was quite small. There is no market leader or monopoly player in this market. And also, the lack of trust between the auto sellers and the buyers would be a major problem in this used car market.

In 2022, Our development strategy should be like this. First, in terms of revenue, we want to surpass the market. This is the first goal. Second, in terms of business, we want to achieve a balance of profit and loss. We want to expand the number of car sales. which is to increase revenue. Thirdly, in 2022, in the field of second-hand cars, we want to get the recognition of car manufacturers through our digital business, and we want to have a certain growth in revenue. These are our three goals for 2022.

Actually, for our used car business plus TTP, we do have a good strategy. We have three targets based on the strategy. The first one is our growth of the revenue should be outpaced the market average. Secondly, we want to achieve breakeven. Based on the breakeven foundation, we are going to further expand the transaction especially the volume of the used car transaction which would drive up the revenue. And thirdly, for the 2022, we would be going to enhance the digital business and the digitalized business for the used car, which would be recognized by the dealers, and that would also drive up the revenue.

Thank you.

Thank you.

Thank you. Our next question, from CICC. Please go ahead.

This is my question. I mainly have a small question here, which is on the profit side. Because we also see that this company is under a certain pressure in terms of OP margin. So I would like to ask about the future overall cost and cost of the company. What is the investment plan in this regard? And when do you expect this margin to have a certain rebound? Let me translate it for myself. So thanks for taking my question. So we can see some pressure on the operating margin this quarter. And I'm wondering if we still have some ongoing investment on the digital transformation or we are considering some cost control in the future. And when do we expect the operating margin to improve margin? Thank you.

Let me answer this question. According to our current plan for 2022, Mr. Long just introduced a change in the overall test in 2022. With the change in the test, our overall traditional income will have a big rebound. In 2022, we will focus on two areas. The first one is the traditional business. We want to improve our operating efficiency, cost control, and investment output. Well, thank you. In terms of the 2022, based on the outlook of the auto market in China, we believe the traditional auto market would recover, which would bring up our traditional business.

On the to-be side, we are going to increase the efficiency and also compress the operating cost, and in this way would achieve a more cost-effective. And secondly, we are going to invest more in the innovative new business, especially the new business model development and the new R&D for the to-be business.

On the other hand, at the C-end, we may focus on some of our innovative content, such as live streaming, and some of the new energy content, to create some special areas for the car owners, and then become a new engine for the growth of traffic, as well as some investment in user operations, and then attract more young consumer groups

Now, on the C-side, we're going to bring more innovative products. For example, the live streaming and the NEV. We are going to establish NEV special area to attract the young generation and attract the new traffic. And we are going to enhance the customer and the user operating and also to attract more young users.

In terms of self-marketing and R&D, from the perspective of traditional and innovation, Zhijia has been focusing on the efficiency of input and output. So overall, the impact of operating margin should not be very big. And since 2022, Actually, with more investments in the sales and marketing and R&D, we quite focus on the efficiency of doing the investment. So this would not affect our operating margins.

And in 2022, with the Chinese auto market, we believe that our margin can also be improved. 谢谢。 Thank you.

I would like to ask about the new energy sector in 2022, because we have seen some changes in the market, such as subsidies and recalculations. How does the company view the outlook of the market?

Okay, this one should look like this. First of all, the development of new energy vehicles in China has become a matter of course. In 2021, it basically maintained a 160% growth rate throughout the year. In January, it continued to maintain a growth rate of more than 100%. Therefore, in this situation, in 2022, the new year car, just like what Mr. and Mrs. Long said in the previous report, Now I want to focus on the NEV. Actually, the NEV, the sales already established momentum, which is quite bullish. Because in 2021, the sales growth is about 160%.

In January, the growth also achieved more than 100%. So we expect 2022, the NUV would continue to experience quite a robust growth. As our chairman has said, this will already account for 25% of the total passenger car in China.

Thank you. There are no further questions at this time.

Operator, let's continue.

sorry there are no further question at this time okay anyone do you still have any follow-up questions yes if nobody's having more questions so I have a follow-up question on the still fleet is there any updates on the on the list of the dealers. And thanks for the more color on it. Thank you.

Thank you. Thank you.

At the end of 2021, our strategy is to increase the price. At the same time, we will increase the price of the new version by 20%. The main value of the new version is to involve the entire business value chain of JiaoShang. We hope that JiaoShang will have the ability to improve the performance of JiaoShang. At the same time, we have also introduced more operating tools in the latest version, so that JiaoShang with the ability 有选择的购买,至于董事长说的,我们在整个产品的差异化和我们交商的分类经营上面,我们做了很多的一些探索。 Thank you. In terms of the dealer lead product, actually, our 车商会, we continue our relationship with the dealers. In 2021, we already designed the strategy that the ordinary version, the price keep has slacked.

The VIP version, we raised the price by 20%. And for the AV business, we create more value for the dealers. We want to empower the dealers to enhance its operating efficiency. And we also provide a lot of operating toolkits for the dealers. As our chairman has pointed out, we want to be a differentiator in the market.

For the ordinary version, we do not raise the price because we want

a wide coverage of the dealers. But for the VIP version, we would offer those capable dealers to make a choice whether they want to accept the VIP version, which is 20% more, but for good value. And we also did a lot of campaigns and activities to empower the dealers to enhance its operating. 同时我们也非常谢谢地看到呢,

In terms of the renewal rate in 2021, which is quite positive,

which is also beyond our expectations. As for the ordinary version, we want a wide coverage, which the coverage is quite positive. And for the higher version, we do see that it has good coverage as well. So altogether, it's 88% of the coverage and the renewal rate. So in summary, I want to say in 2022, in terms of the three kingdom competition between the three major players, our would be the winner.

Thank you, operator.

Thank you. There are no further questions at this time. I will turn the conference back to management for closing comments.

Everyone, thank you very much for joining us today.

We appreciate your support and look forward to updating you on our next quarter's conference call in a few months' time. In the meantime, if you have any further questions, please feel free to contact us. Thank you, everyone. Thank you. Bye.

This concludes the conference call. You may now disconnect your line. Thank you.