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spk00: Ladies and gentlemen, thank you for standing by for Auto Home's first quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. A question 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 Sun. Auto Home's AI Director, Mr. Song. Please go ahead.
spk05: Thank you, operator. Hello, everyone, and this is Sterling Sun. Welcome to Auto Home's first quarter 2022 earnings conference call.
spk00: Earlier today, Auto Home... Sorry, Mr. Song's line is disconnected, and we will connect him again shortly.
spk03: 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 the Chief Executive Officer, Mr. Qianlong, and the Chief Financial Officer, Mr. Craig Yanzhong. After the prepared remarks, our management team will be available to answer your questions. Before we begin, please note that the discussion today will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Legitimation Reform Act of 1995. Forward-looking 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 Security and the Exchange Commission. AutoHome does not undertake any obligation to update any forward-looking statements except as required under applicable law. The earnings press release in this call also includes 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 IR websites. As a reminder, this conference call is being recorded. In addition, a live and archived webcast of this earnings conference call will also be available on Autohome's IR website. I will now turn the call over to Autohome's Chairman and CEO, Mr. Long, for opening remarks. Please go ahead, Mr. Long.
spk05: Thank you. Hello, everyone. 我是汽车之家的董事长兼CEO龙璇。 感谢大家参加今天的电话会。 那么很高兴又和大家进行季度业绩的沟通。 Thank you. Hello everyone. This is Xuan Long, Chairman and CEO of Auto Home. Thank you for joining us today for our discussion of our quarterly results. 那么在此呢,我非常高兴的宣布呢, The senior management team is an important member. In the beginning of this month, Mr. Zhen Yan joined Qisezijia as our chief financial officer. Mr. Zhen Yan has more than 20 years of experience in the capital market. He used to be in the position of senior management in many listed companies and non-listed companies. He is the one who has the full experience of the three capital markets of A Group, US Group and Hong Kong Group. To begin,
spk03: We are delighted to announce and welcome a new member of Auto Home's senior management team, Mr. Craig Yanzong, who joined Auto Home as our chief financial officer in the beginning of May. Craig has over 20 years of experience in the capital market and has held various senior management positions with both public and private companies, making him a rare management talent with a full suite of capital market experience across mainland China, Hong Kong, and the U.S. He has in-depth expertise in financial management, finance, investor relations, M&A, and risk control, as well as an excellent business philosophy and a strategic mindset. We believe that with his rich experience and outstanding leadership, CRAG will be an asset to the company and help Auto Home achieve its next stage of growth.
spk05: With that, I will now turn the call over to our CFO, Craig Zeng, for a closer look at our first quarter operating and financial results. Thank you, Mr. Long. Since the beginning of 2022, there have been repeated cases of COVID-19 in many cities in China, which has affected most industries, including the automotive industry. Although the red-light environment is full of challenges, the opening performance of the automotive industry in the first quarter is still very prominent. The total revenue has reached RMB 14.7 billion. The income ratio of new businesses has further increased to 33.7%. The net profit of the automotive industry has been adjusted to RMB 4.38 billion. The net profit rate has been adjusted to 29.7%.
spk03: Since the beginning of this year, the resurgence of the COVID-19 pandemic in China has impacted most industries, including the automotive industry. Despite the challenging macro environment, Autohome reported an extraordinary first quarter with revenues totaling RMB 1.47 billion. of which the contribution from new business rose to 33.7% of total revenues. Our adjusted net income in the first quarter was RMB 438 million with adjusted net margin of 29.7%. Our overall performance exceeded market expectations and we maintained good profitability as well as a high profit margin level.
spk05: We believe our steady financial performance and strong cash flow will support Autohome
spk03: as we navigate through market uncertainties and focus on long-term development with sustainable competitive advantages. Meanwhile, our healthy balance sheet and ample cash reserves allow us to continue to implement our strategy and generate sustainable returns to our shareholders with our share repurchase program and dividend policy. 接下来我们先来回顾一下一季度的整体情况。
spk05: In the first quarter, we will continue to build a new traffic alliance system at multiple angles, strengthen cooperation with various ecological partners, and seek more ways to expand traffic. The public data of Quest Mobile in March shows that the number of active users of Qianjin Ecological Day of the Car Home reached 45.21 million, which increased by 7.5% in the same period last year, further consolidating our leading position in the automotive industry, exceeding the second and third place in the industry. The customer side of Car Home is also continuing to grow. Through continuous enriching video and live content, the diversity of Car Home content platforms has been significantly enhanced. At the same time, the new energy platform has been modified and upgraded. The content layout is more in line with user habits. The function entry is also more flexible and convenient. These measures have successfully strengthened the content ecosystem of Car Home. User experience has been significantly improved. In addition, in the first quarter, the company's new energy and second-hand vehicles have developed well. Moving on to an overview of our first quarter highlights. During the quarter, we strengthened our collaboration with partners throughout our ecosystem to build an online traffic alliance
spk03: and explore new ways to grow traffic. According to Quest Mobile, auto homes aggregated average DAUs grow by 7.5% year-over-year to 45.21 million in March, fortifying our leading position in the auto media vertical and surpassing the total DAU of the second and third largest players in the market combined. We also continue to develop our CN user base and strengthened the diversity of our content platforms through active development of short videos and live streaming content. Furthermore, we upgraded our NEV platform with a refreshed layout and user-friendly functionalities to cater to users' diverse needs and behaviors, creating a more flexible and convenient user interface. These initiatives have successfully reinforced Auto Home's content ecosystem while delivering a better user experience. Furthermore, in the first quarter, our IV and used car business performed well, exceeding the market growth rate. Regarding digitalization, we have effectively expanded our OEM digital product lineup at the end of last year. continuously supporting the digital transformation in Chinese auto industry, as well as accelerating the process of digital upgrading of the industry.
spk05: Generally speaking, although the auto industry has been impacted by the pandemic, it is still one of the most important pillars in China's economy and full of potential for future developments.
spk03: given the inelastic demands for cars and the ongoing development of the auto market. We have maintained our close business relationships with most of our OEM and dealership customers, who continue to purchase popular media, leads, and digital products from us.
spk05: 具体来看,内容上以大的IP为标志, 带动整体资讯视频化转型的策略顺利推进。 Through expanding the content category and more accurately recommending content that matches user preferences, we attract different interest groups. In the first quarter, we uploaded four video IPs, with a total of more than 100 million views. In addition, in order to meet the constant growth of new energy user needs, we have made corresponding upgrades to the new energy platform, creating a young product model, improving the diversity of new energy content quality and information, and strengthening the quality of short video content.
spk03: Next, I'd like to provide more details on several aspects of our business. In terms of content development, by leveraging our big API brands, we have steadily advanced our strategy of promoting a video-based content transformation. Furthermore, by expanding content categories, and more accurate recommending content that caters to users' preference, we have attracted a more diverse audience. In the first quarter, AutoHome launched four series of IP videos and accumulated over 100 million views in total. In addition, to meet EV users' growing demand, we have upgraded our NEV platforms accordingly. crafting younger products' appearance, enhancing NEV content quality and diversity, enriching short video content, and adding multi-dimensional tools to fully satisfy NEV users' needs for viewing, buying, and using cars.
spk05: In the traditional business segment, the car dealership continues to focus on enhancing product difference, increasing product quality, and service quality, and continuously enhancing the business base, For the development of new business and promotion of new products, we created more opportunities for cross-sale sales. In 2022, the number of contracts of car dealership brands exceeded 90%. Among them, the new high-end customer version of Zunxiang Co., Ltd. with more than 12,000 partners, and the technology version with more than 6,000 partners. These two types of high-end versions have a total balance of more than 80%. The balance of floating brand customers is also significantly improved. In terms of finance, In the traditional business segment,
spk03: We continue to focus on strengthening product differentiation and enhancing product and service quality for our membership product packages, while also steadily solidifying the fundamental foundation of the business, thereby creating a more future across selling opportunities to develop new business lines and promote new products. Over 90% of the brands renewed their contracts for our lead subscription package. Notably, the number of paying dealer subscriptions to our newly launched premium version package reached more than 12,000 during the quarter, and subscribers to the tech version reached nearly 66,000. Together, those two high-end versions account for over 80% of total subscriptions. Moreover, the proportion of dealers who subscribe to our floating model has also significantly increased. Financially, revenue for our leads generation business in the fourth quarter increased slightly on a year-over-year basis. In response to the pandemic's resurges, Auto Home actually created pandemic-proof marketing plans, such as online auto shows, to better serve our customers and minimize the impact to our business.
spk05: The number of sales data product customers has exceeded 18,000. The average number of single-business buyers has increased from 3.01 in 2020 to 3.59 in 2021. This quarter has again increased to 3.91. In the past two years, the increase was nearly 30%. Since the launch of our tree products at the end of last year, we have been facing the overall solution of the main machine factory, and we have received widespread recognition and welcome from the main machine factory. At the data project front, Autohome continues to build on our platform's big data analytics
spk03: capabilities and our industry-leading technology to drive innovation and empower the digital transformation of OEMs, dealers, and other stakeholders of the automotive industry. For dealer data products, we remain focused on improving core product quality to expedite the execution of our whole industry chain strategy. In the fourth quarter, we had over 18,000 dealer customers. and average product repurchase per dealer increased from 3.01 in 2020 to 3.59 in 2021, on to 3.91 in this quarter, representing an increase of nearly 30% in the past two years. Since the launch of new data products at the end of last year, we have received a wild recognition of OEMs to our one-stop solutions and service. In the first quarter, more than 40% of our OEM clients purchased a data product subscription. As our business revenues continue to expand, our revenue streams will become more diversified despite the pandemic's current impact. We continue to provide additional digital products and actively accelerate the digital transformation and upgrading of China's automobile industry. We expect that digital products will contribute an increasing amount of revenue to the company going forward.
spk05: Regarding our energy business, we focus on integration of a brand and a sales
spk03: to building a full chain, closed loop marketing cycle through our NUV commerce services, while also generating a diversified revenue stream. In the first quarter, we maintained our cooperation with most domestic mainstream NUV brands, and the revenue generated by our NUV business surged 156.1% year over year, exceeding the overall NUV market sales growth rate. in several consecutive quarters. In addition, given the rapid growth of NUV sales, we continue to tap into new opportunities in the NUV sector, especially with respect to the new retail sales model to reach more customers and projects and services that meet specific demands. We expect that NUV retail model will begin to contribute revenue to other homes this year. 在二手车领域,汽车之家作为上游,
spk05: The company is the largest car consumer and media platform in China. It has the largest traffic and user volume in the industry. Day Day Up is the largest online auction platform for second-hand cars in China. Ping'an Insurance Group is the largest financial insurance group in China. It has a large number of high-end customers in the car industry. The three companies are leading companies in their respective fields, occupying the leading position in the industry, with 1 plus 1 plus 1 greater than 3 effects, forming an ecosystem that covers the upper, middle and lower sectors of the industry. This is a huge advantage that other competitors do not have.
spk03: In the used car area, Autohome serves as upstream, cooperates with TingTianPai as midstream and joins hands with TingAn Finance, an insurance group, in the downstream to form a complete closed-loop used car knowledge, creating the most comprehensive used car transaction system in China and present. Autohome is the largest automobile contribution platform and vertical media platform in China. with the highest traffic volume and the number of users in the industry. Tintin.py is the largest online used car auction platform in China, and Ping An Insurance Group is the largest financial insurance group in China. Boasting a large number of high-quality automotive customers, each of these three companies leads its respective field, and in combination, we create an impact that's much greater than the sum of its parts. Together, we form ecological chain covering the upstream, midstream, and downstream of the industry and building an entry barrier, a huge advantage of our competitors don't have.
spk05: to win the performance of the second-hand car market and sales. At the same time, we continue to deepen the business cooperation with Tiantian. Through integration and auction services, the first quarter has affected about 20% of the second-hand car trading volume in China, with an increase of about 4%. In the next few quarters, we will continue to increase our research and investment to ensure that the second-hand car number products successfully test and break the ice, and combine the car frame, car frame, and car products to build China's largest online second-hand car, real car frame data and trading platform.
spk03: As I mentioned a moment ago, Autohomes used the passenger vehicle sales drop slightly year-over-year market-wide in the first quarter due to COVID-19. Autohomes' used car business unit together with Tianjin Pi outperformed the market and achieved 5% year-over-year growth in terms of revenues. At the same time, we continue to deepen business scenarios with Tianjin Pi during the quarter to enhance and grow our used car business. Through our matching and option capability, we now involved in more quickly about 20% of all used passenger vehicle trades in China, an increase of about 4% points compared with last quarter. Going forward, we will continue to invest potential resources in development to ensure successful market launch of a new data product for used cars. and combine our car condition and car compressed data products with our certified used car program to become China's largest online real used car data and transactions platform.
spk05: Looking forward to the future, we will continue to set traditional business foundations and actively invest in new business areas to help the company's second curve of rapid growth. Although the epidemic has repeatedly brought huge challenges to the Chinese automotive industry and the entire national economy in the first half of 2022, We believe that in the second half of 2022, when the entire industry is back to normal, we will see a rapid recovery and growth of the automotive industry. Automotive companies will start from their core capabilities and look for a larger market, with more sustainable profits and long-term benefits. From a long-term perspective, with strong network effects, excellent innovation and rich experience from remote management teams,
spk03: In conclusion, we will continue to solidify our traditional business foundations while actively investing in new business avenues as we move forward. Also, the COVID-19 restrictions in the first half of 2020 had posed a tremendous challenge to China's auto industry and the broader Chinese economy. Autohome practically adjust our operation model to adapt to the new economic environment. We believe as the industry covers in the second half of the year, Autohome's business will quickly rebound with it. We will leverage our core competencies to explore large markets and more sustainable portfolio margins to obtain a greater, longer-term business benefit supported by our trend network impact. Excellent innovation and capabilities and experience. Visionary management team, we believe that Autohome will continue to lead the development of China's auto industry and create lasting value of the entire industry in the long run. Next, let me walk you through the key financials for the first quarter of 2022. Please note that as with the prior course, I will reference RMB only in my discussion today, unless otherwise stated. Net revenues for the first quarter were $1.47 billion. Due decrease compared with the corresponding period of 2021 was primarily attributed to the impact of the ongoing chip shortage, as well as the COVID-19 pandemic on certain cities in China in Q1 since the year. For a detailed breakdown, media service revenue came in at $267 million. Least generation service revenues were $708 million. And online marketplace and art revenues were $496 million.
spk05: Moving on to cost, cost of revenues was $255 million, and the gross margin was 83%. In terms of operating expenses, sales and market expenses in the first quarter were $592 million,
spk03: The decline compared with the corresponding period of last year was primarily due to a decrease in promotional spending. Product and development expenses were $355 million, an increase compared with the corresponding period of last year, primarily attributed to higher investment in research and development activities for digital projects. Finally, general and administrative expenses were $137 million.
spk05: Overall, with the other operating profits of $241 million, and just net income attributed to AutoHomes Inc. worth $438 million. Non-GAAP basic and diluted earnings per share were 0.87 and 0.87 respectively.
spk03: Non-GAAP basic and diluted earnings per ADS were 3.7 and 3.7 respectively.
spk05: As of March 31, 2022, our balance sheet remained very strong with cash, cash equivalents and short-term investments of $20.27 billion. We generated operating cash flow of $496 million for the fourth quarter of 2022. On November 18, 2021, our Board of Directors
spk03: authorize a share repurchase program and which we repurchase up to 200 million of auto homes ADS for a period not to exceed 12 months thereafter. As of May 2020, we have repurchased approximately 1.57 million ADS for total cost, approximately 443.9 million. With that, we're ready to take your questions.
spk00: Thank you, management. So, ladies and gentlemen, if you'd like to ask any questions to the management, please press 01 on your telephone keypad. To cancel, please press 02. Once again, please press 01 on your telephone keypad to ask any questions. Our first question is from Brenda Chao at the CICC. Please go ahead.
spk02: And what is the judgment of the demand for the next half of the year? And the second question is about our data products. I would like to ask the management to talk about the direction of future investment in data products. And the last question is about second-hand cars. I would like to ask the management about the view of the second-hand car market in 2022 and the performance guidance we take every day. Good evening, management. Thanks for taking my questions. I have three here. First one is about the industry. Could management give some color on the supply chain pressure of auto companies? And to what extent the current cheap supply can meet market demand compared with the pre-pandemic period? And what's management's expectation of the new car sales markets? in the second half of this year. And my second question is about the data products. So what's our R&D strategy in data products? And the third question is about the used car market. What's our management view on the used car market? And please give some color on the operation results of TTP. Thanks.
spk05: Thank you, Mr. Zhao. The first question is about the recovery of the industrial chain and the supply of chips. Let's ask Chairman Long to answer. Thank you. Okay. Thank you for the question about the industry. Regarding the industrial chain of the industry, I want to look at it this way. First of all, I want to explain that the first one is that Let's take a look at some of the corresponding data on the current retail market. Because this data has already been released. First of all, let's look at the corresponding data of the market. The new car market should start in March. It will turn into a negative growth in March. January and February are fine. It will turn into a negative growth in March. But we can see that by April, the rate of decline will be very strong. Let's take a look at the data of Chen Lianhui. Chen Lianhui's data shows that the retail sales of used cars decreased by 35.5% in April. This is Chen Lianhui's data. Let's take a look at the sales of mid-size shoes. This data shows that the sales of mid-size shoes decreased by 43.4% in April. This is the data in April. Let's take a look at the data in May. May may be more serious. May is the first half of the month. According to the related data of the Chen Lianhui, the sales data of our Chen Yongzhe is down by 27% in the first half of the month. 21% in the first half of the month. I just said it. It's down by 21%. From these data, it should be said that the COVID-19 pandemic has a very serious impact on the test.
spk04: Well, thank you very much for the question. Let me echo with the question by quoting some of the data to you about the big market. Actually, if you look at the whole market, if we look at the already published data, you can see that in January and February, the market is still doing okay. However, getting into March, it has get into net growth. So because of the pandemic, especially in April, For example, let me quote you with a number which according to the Passenger Car Association, the retail sales volume had dropped by 35.5% for the passenger car. Actually, according to another data which is released by the China Auto Association, the wholesaling volume had dropped by 43.4%. Actually, getting into May, situation get even worse. For the first half of May, If you look at the Passenger Car Association's number, the car sales volume dropped by 21%. It's only half a month, you know, sales volume. It already dropped by 21% comparing with the same period of last year. So actually, in the short run, we do see the pandemic actually still have some negative impact on the market, and there are a lot of uncertainties tied to the pandemic. Thank you.
spk05: This is what I just talked about. This is some of the data that has been released accordingly. So the second point I want to talk about is the situation of the supply chain, which is the recovery of the supply chain. So in fact, since April, the industrial chain and supply chain of our domestic automotive industry have experienced a very big test chain. So many companies have stopped production. Then logistics transportation is also affected by this kind of problem. So the supply and demand of production is extremely declining. But we also see that cities, including Shanghai, are actively promoting enterprises to serve the business. Especially the industrial chain of long triangle cars is currently in the process of resumption.
spk04: After we talked about the sales in the market, now let's shift to the supply side. If you look at the supply chain of the Chinese auto market, actually starting from 2022 April, we do see the supply chain experienced a lot of challenges, especially due to the lockdown policies. For some of the cities, a lot of companies have to sustain, actually have to stop functioning. And also there are big challenges on the logistics side. And actually, it already affected the supply chain a lot, especially on the supply side. The supplying capabilities have significantly dropped. Let me take Shanghai as an example. Shanghai has been under lockdown for quite some while. Now, Shanghai municipal government is trying to proactively reopen and restore some of the auto market, especially the production side.
spk05: So I just talked about the second point, which is actually about the recovery of this supply chain. It should be the government who is actively pushing this corresponding enterprise to carry out this reconstruction and inspection. So let me talk about my opinion on this part of the car's demand list. I look at it this way. Although the sales of this car is suppressed, but with this kind of reconstruction and inspection of Shanghai and other areas, The car industry chain should be gradually recovering. Then the impact of the epidemic, then the border is also being cut. That is to say, the direction of the car industry's recovery, then I am still optimistic about this. But what is the biggest problem in the middle? That is to say, the car is still a general consumer product. Then the middle consumer may still lack confidence in the economy. The government is trying to proactively push the restorement and the reopening of some of the plants.
spk04: However, on the demand side, although a lot of consumption has been already curbed by the pandemic, However, we do see the negative impact is getting, you know, the marginal effect is getting slimmer and slimmer. I personally think in the future, I'm still quite confident about the Chinese auto market. However, we also have to notice that because of the overall economy is still quite weak, the consumers' overall confidence level is still limited. So that's why Auto consumption is a quite expensive and the large is a kind of quite expensive consumption goods. So if the consumer's confidence level has not been fully restored, I believe that would impact the demand side. 最近中汽协的副秘书长陈世华有个讲话,
spk05: Then I also want to tell you this, because he has a very obvious statement about the situation of this demand list. Then Chen Shihua, he said that since February 2022, he has been affected by the lack of raw materials and the increase in the price of general goods. More than 20 car companies have announced that they have adjusted the price of new energy vehicles. I also want to quote
spk04: what the China Auto Association's Secretary General, Mr. Chen Shi Hua, had recently made a comment. He said that ever since February of 2022, due to the shortage of the cheap supply in the market and appreciation of the raw materials, as well as the large commodities price, over 20 OEMs had already announced that they're going to reassess the pricing. on the new renewable vehicles, the NEV. And actually, after the price readjustment, we do see that on the demand side, the consumers had significantly reduced the number of consumers. So that's why a lot of consumers believe the price may further drop. So they postponed their purchasing demand. So in this way, From the perspective of consumer as well as investors, we do see that the enthusiasm for investment and consumption has been significantly weaker.
spk05: If there are no obvious policy measures to increase the growth of the automotive industry, then this year's goods and services will be difficult to achieve the expected growth target. But we also see that on the morning of May 24th, the Chamber of Commerce has now further deployed a policy to stabilize the economy, and is working hard to promote the normal track of economic recovery. Well, actually, we do see that auto as a quite expensive consumption goods. It is strongly related to people's consumption confidence level. If the confidence level is low,
spk04: and people are getting more and more cautious and prudent in purchasing the car, we believe the auto market in the future would encounter the cold market and the downward ship market. If there's no significant supporting policy released by the government, I believe that this year may not be easy to reach the annual target designed at the beginning of the year. So the growth targets is not that easy to achieve. However, having said that, we are still very happy to see actually the silver lining. For example, on May 24th morning, the State Council had held a meeting to discuss how would the central government further support the economy. They announced a lot of measures to stabilize and boost the economy. For example, in some of the cities, the restrictive purchasing policy has been eased, and people are getting more freely to purchase vehicles, and also the tax cut for the vehicles purchasing, the total amount has reached to $60 billion. So the $60 billion consumption tax has been cut, which would boost the consumption market for the auto. 所以从这个国家还有这个地方的话呢,
spk05: For the automotive industry, we are not only promoting some of the industry's incentives and policies, but we are also paying close attention to the consequences of these policies. As for the chip issue, the last one is about the chip issue. I see it this way. In China, the chip supply of cars is still very tense. It cannot fully meet the requirements Well, actually, luckily, we do see that a lot of local government as well as central government start to introduce more and more stimulus policies
spk04: towards the auto market. And we believe that with the more and more supporting policy getting released, I believe the market may turn around. We would pay close attention to the market move and then making our strategies accordingly. Now let me comment on the cheap supply. Currently, if you look at the cheap supply in the auto market, it's still the supply is very tight. It cannot fully meet with the demand of the OEMs. And it's not easy to restore at the, you know, level before the pandemic. So I believe it will take a while for the cheap supply to get back to the normal rate before pandemic. So I hope that the cheap supply, you know, especially the tight situation will be eased gradually in the future. And the data would help the market to get to the normal no track.
spk05: Thank you for your answer, Mr. Long. Next, let's have Mr. Zeng Yan, CFO, to answer the question about data products and second-hand vehicles. Mr. Zeng. Okay. One direction of data products. In fact, data products are mainly from the main factory to the entire automotive sales industry. Its core goal is the final sales. And the pain point is that the chain of sales is relatively long. Basically, now there is no company that can really serve the entire chain before. And we, the home of automotive products, actually hope to develop a digital tool on the entire chain to help them to improve the transformation of the whole chain of sales, including from clues to e-commerce, trading, customer satisfaction. We are going to serve the entire system. In 2022, we will continue to pay attention to the accumulation of underlying data and the upgrade of core technology. We plan to do a few core points. One is that we want to combine the entire system, including us, including our security and other various data, to build a multi-dimensional image label system and establish a data barrier. The second is that we actually have this system. It's still a CRM plus. Well, thank you very much. In terms of the data product, actually, if you look at the OEM which to the whole auto market till the end, the core,
spk04: KPI, which is the sales volume, we do see that the marketing and sales chain is very long. There's no single company which can cover such a long value and business chain. Actually, we are the company who are trying to cover the whole marketing and sales chain by providing the customized product. For example, from the lease generation to the store visits, to boost transaction to the real transaction to the customer satisfaction rate enhancement, we are building our data product to cover all the value chain. Actually, 2022, what we have done is to consolidate our data as well as upgrading our technologies. By consolidating Ping An's data and a lot of data source together, we are trying to create a big and a multi-dimensional profile of the data, and we are trying to create a data barrier for our competitors. After we create such a data barrier, then we can come up with a more sophisticated and more upgraded data product. For example, we provide three key parts of our data product. One is we call it CRM Plus, and it covers the CRM Secondly, it is a more active management model. And thirdly, it is a module-based and a very flexible system.
spk05: The country has a series of policies to support the development of the second-hand car industry. On January 21, the West Division of the Development Commission issued an implementation plan to promote green consumption, which requires the active development of second-hand car sales, to promote the implementation of the policy of canceling the second-hand car limit, and to expand the circulation of second-hand cars. On March 5, the government's work report also proposed to stabilize the consumption of cars, home appliances, etc., and to cancel the unreasonable restrictions on second-hand car transactions.
spk04: Now thank you for the used car business. We are quite optimistic about the used car business, and we expect that this year there will be 90 million cars being transacted in the used car market. The growth rate can be 8% year-on-year, And we also see a lot of supporting policies get released. For example, in January 21st, the actually the reforming and the development and reforming committee released a document which is trying to boost to the green consumption concept. And they significantly pointed out the used car business need to be boosted. And that they encourage the building of more dealers for the used car business and trying to enlarge the circulation of the used car and boost the liquidity of the used car market. And secondly, on March the 5th, we do see that the government designed a further policy to boost the used car, the white goods consumption, and they also designed some detailed policies. For example, enlarge the parking lot establishment and build more charging poles, etc., In this way, the government released more and more policies trying to boost the used car business.
spk05: On the other hand, the second-hand car is a non-standard product. It requires more communication, more offline activities such as car viewing. In the case of the epidemic, it has been greatly restricted and affected. So in general, we have seen that the second-hand car in the first quarter, the market is basically declining. We have been through all kinds of efforts. We are growing, but the overall market is still declining. In the second quarter, the policy of the second quarter will not be too good. Well, we said we used to be quite optimistic about the used car market, but the real situation is more complicated than what we have believed. For example, there are pros and cons in this market. On the pro side, because of the cheap supply shortage,
spk04: that curbed a lot of launching of the cars in the new car market. A lot of the dealers and OEMs, they don't have enough cars to sell. If you want to purchase a new car, you have to wait for a while, for even a few months to get the car. So a lot of the buyers, they shifted to the used car market to buy the used car, which boosted the market, which is a pro. However, on the con side, Because used cars are not standardized products. It is non-standardized. So you have to look at the car, test drive the car offline. Due to the COVID-19 pandemic policies, especially the quarantine policies, that curbed a lot of offline store visits to purchase the used car. So in this way, we do see that in Q1, the overall used car market had slightly dropped. However, we encountered positive growth, but the average market, the whole market had dropped. In Q2, we believe the market may continue to be weak. Let's put the hope on the second half of the year. If the pandemic policies can be, you know, the COVID can be better controlled, then we do, the second half of the year, there will be more opportunities on the used car market. Thank you.
spk00: Thank you. Our next question is from Maddy at Jeffery. Please go ahead.
spk01: Thank you very much for taking my question. I have three questions. So the first one is about can management provide some color on the monthly business momentum and the impact of the Beijing auto show in second quarter under the pandemic outbreak and our expectation on the auto industry outlook in second half? The second question is about the competitive landscape in online auto vertical. And the last question is on the media and the lead generation outlook in the second half this year. Thank you. Thank you for your question. Due to the limited time, let's ask CFO Zeng to briefly answer the above questions. Thank you.
spk05: Okay, the delay of the Beijing station is now set. About 40% of new cars will be released. It will also be delayed. This is still a big impact. In the second half of the year, we expect that if the epidemic is controlled in a short period of time, there will be no new large-scale outbreak of this epidemic in the future. We expect that the test may start in the third quarter of the second half of the year and gradually recover.
spk04: Well, thank you for the question. Now talking about the Beijing Auto Show, yes, the time has been postponed and the time is still uncertain of when it will be held. Actually, 40% of the new car launching has already been postponed. So that's why it already impacted the new car market a lot. If the COVID pandemic can be better controlled, hopefully for the second half of the year, If we do see less quarantine cities, then we believe that starting from third quarter, we will see some pickup in the auto market. Thank you.
spk05: It's a relatively close range. In general, it's probably a situation like 532. In the next half of the year, we think that the development of media and clue business will be affected by a short-term market. And the development of the whole clue business may depend on the recovery of the epidemic.
spk04: Now, talking about the competition, actually on the 2B side, we continue to be the number one player in the market. Our market share is more than 50%, which is 52%. And actually for the rest of the two competitors, they are quite close. If you look at the market share breakdown between the top three players, I believe it was five to three to two. And secondly, for the second half of the year, in terms of how the media and the lead business would evolve, actually it depends on the pandemic. And also for the media business, the advertisement and marketing expenditures do get negatively impacted. For the lead business, if the COVID-19 pandemic can be better controlled, I believe that starting from third quarter, the lead business would start to perform better. Thank you.
spk00: Thank you. There are no further questions at this time. I will turn the conference back to management for closing comments.
spk05: Thank you, 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, please feel free to contact us if you have any further questions or comments. Thank you, everyone. Bye.
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